Democrats to receive Bush budget warning

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President Bush will try to work out a deal on spending with the new Democratic majority on Capitol Hill, but will be prepared to veto bills that exceed his total budget or that slice away at defense needs, said Office of Management and Budget Director Rob Portman.

"With the Democrat leadership, we'll try to be transparent and we'll try to be clear in our concerns upfront, and I hope we can work things out without resorting to a veto. But if necessary we will resort to a veto," Mr. Portman told The Washington Times in an interview about the upcoming budget and the Democratic control of Congress.

Democrats took both houses of Congress in the Nov. 7 elections. Mr. Portman, a former six-term congressman from Ohio, has assumed the role of go-between, making use of his relationships with many of the top lawmakers to find areas of cooperation on annual spending and on thorny issues such as Social Security.

He has spoken with incoming Ways and Means Committee Chairman Charles B. Rangel, the incoming chairmen of the House and Senate budget committees, and Sen. Max Baucus, who will head the Senate Finance Committee. He also has a meeting scheduled with Sen. Robert C. Byrd, the West Virginia Democrat who will head the Senate Appropriations Committee.

Some conservatives have argued that Democratic control of Congress will give Mr. Bush a sense of more freedom to use his veto powers without causing conflict with congressional leaders in his own party.

Mr. Portman said he expects presidential vetoes of spending bills in the last two years of Mr. Bush's administration. The president has vetoed only one bill in his six years in office. The House sustained that veto, against a measure to expand federal funding for embryonic stem-cell research.

"The veto, not to pass the buck, but a lot of it depends on the Democratic leadership," Mr. Portman said. "If they choose to try to work things out, we will be in a position to try to do that. We would rather try to make progress. The president is not interested in scoring political points over the next two years; he's interested in getting things done."

Mr. Portman said a center-right coalition could emerge on issues such as spending and extending the 2001 and 2003 tax cuts, particularly since the rate of taxes as a percentage of the economy -- at 18.4 percent -- is higher than the 18.2 percent average over the past four decades.

"It's not that we are undertaxed as much as we need to get our spending in line with our revenue. That's the fundamental basis on which we should be able to build a majority on a number of issues," he said.

Annual federal spending has mushroomed during Mr. Bush's presidency, from $1.86 trillion in fiscal 2001 to $2.67 trillion in 2006. The Congressional Budget Office forecast spending to rise to $2.8 trillion by the end of the 2007 fiscal period. Much of the increase has been in federal entitlements for programs such as Medicare, Medicaid and Social Security, which have ballooned from $1 trillion in 2001 to $1.42 trillion in 2006.

The director, interviewed last week in his office at the Eisenhower Executive Office Building, said opportunities could arise to streamline or cut specific programs. The administration has achieved little toward those goals with a Republican-led Congress.

The White House hopes Democrats are willing to eliminate public education programs that aren't showing results and to put the money into those that are more promising.

Mr. Bush has sent budgets to Congress with the understanding that lawmakers would change the distribution of money, but threatened a veto if the total exceeded his limit. He also has threatened to veto defense spending bills if they were altered by Congress too much.

Mr. Portman is deep into the process of receiving 2008 budget requests from agencies and departments and returning them with suggestions and changes.

He has not received a total discretionary spending cap and said it is too early to determine whether discretionary spending can be reduced.

Potential flash points for a spending fight include the fiscal 2008 budget, the first chance Democrats will have to put together a framework for spending. It will give them part ownership of the federal deficit for the first time and force them to take a position on tax increases.