President Bush released an ambitious FY 2006 budget proposal that held the line on discretionary spending. The budget prioritized national security by providing the Defense Department with a 4 percent budget increase, while saving $20 billion by eliminating or vastly reducing nearly 150 outdated and wasteful programs.

Progress in Congress has been less apparent. The House has rejected several promising budget process reform proposals. The Senate, meanwhile, has restored much of the spending cut in the President’s budget proposal.

Despite hopes of early action, the Administration has decided to put off proposals for legislation reforming the regulatory process until late 2005, at the earliest. Some reforms may be pursued in Congress, but—in part because the House regulation subcommittee has new leadership—the agenda is still unclear.

The Senate is making progress towards confirming good judges. Filibuster reform remains on the table. Meanwhile, the White House has been nominating, and in some cases re-nominating, good judges who understand the proper role of the courts.

Reps. Jeff Flake (R-AZ) and Scott Garrett (R-NJ) will be introducing separate pieces of legislation very soon to turn back the federal highway program to the states.

The President’s FY 2006 budget proposes to make the tax cuts permanent.

The President has appointed an Advisory Panel to suggest changes to the tax code. This panel is not expected to recommend junking the tax system and replacing it with a simple and fair flat tax, but reports indicate that it will propose policies that move in the right direction—though there is a small danger that it will endorse a European-style value-added tax (VAT) as an addition to the current system.

In a great disappointment, the Administration has proposed to increase the U.S. subsidy to the Organization for Economic Cooperation and Development, even though the Paris-based bureaucracy is pursuing policies such as global taxation that threaten American economic interests.

Recent legislative action relating to the status of marriage has all occurred at the state level. A total of 19 states currently have constitutional amendments pending at various stages in the amendment process: Wisconsin, Massachusetts, Tennessee, Kansas, Arizona, Florida, Alabama, South Dakota, California, Indiana, Iowa, Minnesota, New Jersey, New Mexico, North Carolina, South Carolina, Texas, Virginia, and Washington.

The President’s FY 2006 budget proposed $218 million for charter schools, nearly $37 million in grants for charter school facilities, $26.5 million for public school choice programs, and $50 million for a choice incentive fund for areas seeking to create school choice programs. The President has proposed the elimination of some two-dozen ineffective and special-interest programs. These are positive steps. But it is left to be seen whether Congress will follow the President’s lead.

The Joint Committee on Taxation released a 400-page document looking at the financial oversight of charities; a full report is expected in late spring.

The Workforce Investment Act (WIA) passed out of the Education and Workforce Committee in mid-February with faith-based hiring rights protected. The vote was along party lines, with the exception of Rep. John Barrow (D-GA), who voted with Republicans in favor of hiring protections. A full vote is expected in March.

In March, the Senate Finance Committee approved the Personal Responsibility and Individual Responsibility for Everyone (PRIDE) legislation to modify and reauthorize the landmark Welfare reform of 1996. This legislation now awaits action on the Senate floor. The PRIDE bill strengthens work requirements by 5 percent each year, from 50 percent in 2006 to 70 percent in 2010. It also increases required working hours per week from 20 to 24 hours. The legislation includes new funding for marriage promotion and for efforts to promote responsible fatherhood. Funding for childcare is also increased. It is expected, however, that amendments will be offered to expand the definition of abstinence education to include contraception promotion programs.

Heritage has called for a delay or repeal of the drug benefit and the extension of the Medicare drug discount card. Reps. Mike Pence (R-IN), Zach Wamp (R-TN), and Jeff Flake (R-AZ) and Sen. Judd Gregg (R-NH) have all called for a reconsideration of the drug entitlement. On March 4th, Rep. Flake released draft language for a one-year delay of the entitlement and an extension of the drug discount card program.

President Bush has put forth an aggressive agenda aimed at making health care coverage more affordable. This agenda includes proposals for refundable health care tax credits for low-income individuals and grants to states to develop insurance pools. Congress has also taken steps to address the uninsured. The Senate-passed budget set aside funds for legislation aimed at expanding access to health care coverage and several Members of Congress have introduced health care tax credit proposals. These are small but important initial steps for future action on health care.

Social Security reform has been the President’s signature issue for 2005 to date. He has laid out an impressive proposal—consistent with The Heritage Foundation’s principles for reform—to allow younger workers to direct a portion of their payroll taxes into personal accounts that they would own. The President’s proposal sparked a nationwide debate that continues today. Progress in Congress has been mixed. While many legislators were pleased to see the President take the lead on this important issue, others feared its controversy. Still, the President continues to build support for his reform proposal—most visibly through a series of town hall meetings across the country—and some Members of Congress have begun to hammer out the legislative details of reform. Expect action later in the year, perhaps as early as June.

There has been substantial progress made in capturing leaders of Abu Musab Zarqawi’s network in Iraq. Commanders say “the noose is tightening” around the Islamic radical terrorist network in Iraq. U.S. military offensives kept insurgent forces in Iraq off-balance in January and helped to limit their disruptive attacks during Iraq’s January 30 election.

Afghanistan remained relatively quiet as the harsh winter weather led Taliban and other radical anti-Western insurgents to retreat to their home villages or across the border to Pakistani tribal areas.

American efforts to isolate and pressure Syria to halt its support of terrorism against Israel, Iraq, and Lebanon were bolstered by the international backlash against the February 14 assassination of Lebanese Prime Minister Rafik Hariri. President Bush and Secretary of State Condoleezza Rice publicly warned Damascus against continued interference in the internal affairs of its neighbors.

Meanwhile, Iran successfully has staved off international pressure to

While Bin Laden and his top lieutenants remain at large, there has been substantial progress made in capturing at least 12 leaders of Abu Musab Zarqawi’s network in Iraq in early 2005. General Abizaid, the commander of the U.S. Central Command, stated that “the noose is tightening” around the Islamic radical terrorist network in Iraq.

Afghanistan remained relatively quiet as the harsh winter weather led Taliban and other radical anti-Western insurgents to retreat to their home villages or across the border to Pakistani tribal areas. U.S. military offensives kept insurgent forces in Iraq off-balance in January and helped to limit their disruptive attacks during Iraq’s January 30 election.

American efforts to isolate and pressure Syria to halt its support of terrorism against Israel, Iraq, and Lebanon were bolstered by the international backlash against the February 14 assassination of Lebanese Prime Minister Rafik Hariri, who had been escalating his public opposition to Syrian domination of Lebanon. President Bush and Secretary of State Condoleezza Rice publicly warned Damascus against continued interference in the internal affairs of its neighbors. Meanwhile, Iran successfully has staved off international pressure to halt its support of terrorism by stringing out diplomatic talks with Britain, France, and Germany on the future of its nuclear program.

The United States helped to facilitate the January 9th Palestinian elections, which empowered Mahmoud Abbas as Yasser Arafat’s successor. Although Abbas made a limited break with Arafat’s legacy of terrorism, he continued to embrace Palestinian militants, such as the Al Aqsa Martyr’s Brigades, which have launched terrorist attacks against Israel. Moreover, Abbas shows no sign of cracking down on Hamas and Palestinian Islamic Jihad, which continue to work for the destruction of Israel and the construction of a radical Islamic state.

In terms of waging a global war of ideas, President Bush annunciated a bold and ambitious vision of the United States as the world’s champion of freedom and democracy in his inaugural address. Recent elections in Afghanistan, the Palestinian territories, Iraq, and Saudi Arabia have emboldened democratic reformers throughout the Middle East. Even Walid Jumblatt, the virulently anti-American leader of the Lebanese Druze, who has taken the lead in opposing Syrian domination of Lebanon, admitted that: “It’s strange for me to say it, but this process of change has started because of the American invasion of Iraq. I was cynical about Iraq. But when I saw the Iraqi people voting three weeks ago, eight million of them, it was the start of a new Arab world…. The Syrian people, the Egyptian people, all say that something is changing. The Berlin Wall has fallen. We can see it.”

Little progress has been made in restricting the WMD programs of rogue states such as Iran, although there is a growing international understanding of the seriousness of the threat. The International Atomic Energy Agency’s Board of Governors on March 3rd called on Iran to stop withholding information on its nuclear activities, but Iran continues to drag its feet on complying with its obligations under the Nuclear Nonproliferation Treaty.

Both Houses established permanent homeland security committees in the 109th Congress.

The Senate held hearing on the joint Heritage Foundation-Center for Strategic and International Studies report DHS 2.0: Rethinking the Department of Homeland Security. The Department of Homeland Security undertook a study of one of the key recommendations in DHS 2.0, merging the Customs and Border Protection Agency and Immigration and Customs Enforcement. The Department of Homeland Security announced plans to create a permanent policy and planning office.

The President’s FY 2006 budget proposes to restructure federal homeland security grants to state and local governments along the lines suggested Heritage Foundation scholars.

The administration proposed in its FY 2006 budget to create an Office of Screening Coordination and Operations to better coordinate the development of new technologies in the Department of Homeland Security.

The FY 2006 budget proposal fully funds critical technology programs in the Department of

President Bush has submitted both his FY 2006 defense budget request and supplemental funding requests for fiscal 2005. The defense request for 2006 is just under $420 billion for the core defense program, a 4.8 percent increase over the 2005 level. The vast majority of the almost $82 billion supplemental request is to fund ongoing operations in Afghanistan and Iraq.

President Bush’s budget renews his request for funding for nuclear weapons research, which was cut by Congress last year. The research funds are to go the Robust Nuclear Earth Penetrating Program, advanced nuclear weapons design research, and a modern nuclear pit production facility.

President Bush’s defense budget request would continue a number of military-related space programs. These include the Space-Based Infrared System and the Space-Based Radar. The request is insufficient, however, in the area of moving forward aggressively with space-based missile defense interceptors.

President Bush broadly affirmed that Europe should remain the foundation of all major U.S. defense alliances. The President in a February speech in Mainz, Germany stated, “Europe is America’s closest ally.” Indeed, just one day earlier in Brussels, Mr. Bush expressed that “the relationship between the United States and Europe is a vital relationship…and our relationship within NATO is the cornerstone of that relationship.”

President Bush strongly reinforced the U.S. position that NATO should remain the predominant trans-Atlantic security organization. In a February meeting with Secretary-General Jaap de Hoop Scheffer at NATO headquarters, Mr. Bush described NATO as “the most successful alliance in the history of the world,” the “cornerstone” of U.S.-Europe relations.

Despite the promising nomination of former Presidential Adviser Karen P. Hughes as Under Secretary for Public Diplomacy in the U.S. Department of State, America's foreign public relations effort still needs help. The Under Secretary still lacks authority to carry out programs from the Department to embassies overseas, public diplomacy units remain scattered throughout the Department's bureaucracy, minimal inter-agency coordination on public diplomacy has yet to produce a public diplomacy doctrine, the White House lacks a public diplomacy direction at the National Security Council level, and Congress has yet to restore funding to pre-1995 levels for international exchange programs. Meanwhile, the U.S. Broadcasting Board of Governors maintains a crazy quilt of proprietary and surrogate broadcasting outlets inconsistently managed by part-time board members who frequently usurp the authorities of directors they are meant to advise. Ms. Hughes will need her influence at the White House to correct these deficienci

In his State of the Union address, President Bush outlined America’s need for reliable and environmentally sound energy sources and re-stated his energy strategy, calling for conservation and efficiency, increased domestic production, diversified U.S. energy supply, and modernized U.S. energy infrastructure. This follows Heritage’s recommendations.

In March, the Senate passed an amendment to its budget resolution to open the Arctic National Wildlife Reserve (ANWR) to exploration and drilling. Still, the fate of this long-overdue opening rests on that of the budget.

The Nethercutt amendment prohibits disbursement of Economic Support Funds to countries that are party to the Rome Statute unless they are specifically exempted in the legislation, have signed an Article 98 agreement with the U.S., or have received a waiver from the President. The President signed it into law on December 8, 2004.

Overall, the Administration requested $1.58 billion for Contributions to International Organizations and Programs. This includes $931 million for the United Nations and affiliated organizations, of which $439 million is for the United Nations Regular Budget—an increase of $77 million over 2005. The Adminstation requested $1.035 billion for contributions to international peacekeeping activities and $5.3 million for the International Panel on Climate Change/UN Framework Convention on Climate Change even though the U.S. is not a Party to the Kyoto Protocol on Climate Change.

Congress has held many hearings on United Nations scandals including Oil for Food and abuse by United Nations P

The Nethercutt amendment prohibits disbursement of Economic Support Funds to countries that are party to the Rome Statute unless they are specifically exempted in the legislation, have signed an Article 98 agreement with the U.S., or have received a waiver from the President. The President signed it into law on December 8, 2004.

Overall, the Administration requested $1.58 billion for Contributions to International Organizations and Programs. This includes $931 million for the United Nations and affiliated organizations, of which $439 million is for the United Nations Regular Budget—an increase of $77 million over 2005. The Adminstation requested $1.035 billion for contributions to international peacekeeping activities and $5.3 million for the International Panel on Climate Change/UN Framework Convention on Climate Change even though the U.S. is not a Party to the Kyoto Protocol on Climate Change.

Congress has held many hearings on United Nations scandals including Oil for Food and abuse by United Nations P

The Bush Administration requested $3 billion in appropriations for the Millennium Challenge Account for 2006. Although eligible countries have taken longer than expected to propose projects for the MCA, many countries are expected to finalize their proposals soon. These proposals require funds greatly exceeding the $2.5 billion appropriated in 2004 and 2005, making the 2006 budget request vitally important if the MCA is to meet its objectives. The President’s request, originally projected to be $5 billion, already reflects the delayed schedule.

The Bush Administration has requested $4.1 billion for the Agency for International Development and $1.3 billion for International Financial Institutions, including $950 million for the International Development Association—the first installment in the U.S. pledge of $2.85 billion over the three years.

The U.S. Australia Free Trade Agreement entered into force in January 2005.

The U.S. Morocco free trade agreement was passed by the legislature in the U.S. (2004) and in Morocco (2005) and should enter into force in the next few months.