- The Washington Times - Monday, March 19, 2001

Budget Director Mitch Daniels says the administration has received assurances from Congress that it will take up a budget plan that will significantly cut the rate of spending growth to the slower 4 percent level proposed by President Bush.
In an interview with The Washington Times, Mr. Daniels, the president's chief budget strategist, also said that Mr. Bush was "willing to be flexible on spending up to a point." But he warned that the president would use his veto if the appropriations process exceeded the 4 percent ceiling or if Congress resumed the record-breaking pork-barrel spending abuses of previous years.
"Of course, he'll back it up. Of course, [the veto's] an option, though we hope it won't be necessary," Mr. Daniels said. "We want to work these things out."
Noting that Congress inserted 6,486 unrequested spending provisions that added $16 billion to last year's budget, Mr. Daniels suggested that the president would step in to block such pork-barrel spending practices "if the run rate of earmarking and special projects was unchanged."
"In the end, Congress has the right to decide how funds are spent, but the president certainly can step in and impose limits where he has to," he said.
Mr. Daniels also said that he expected the projected budget surpluses will come in higher than have been forecast, despite the economic slowdown; that the president will be proposing ways in the future to privatize more government programs; and that future budgets will propose other spending reforms and program terminations where they are needed.
Mr. Daniels, director of the Office of Management and Budget, said that Sen. Pete V. Domenici, the New Mexico Republican and Budget Committee chairman who had been critical of Mr. Bush's lower spending rate, recently told Mr. Daniels that the budget resolution he will soon bring to the Senate will meet the overall 4 percent expenditure ceiling that Mr. Bush wants imposed on discretionary spending.
"Sen. Domenici told me he will bring the budget resolution to the floor that will meet the president's proposed spending levels. He talked with me about how he can get this done," Mr. Daniels said. Similar assurances have been received from Mr. Domenici's counterpart in the House, he added. "Things look very good there, too."
"I think things [on Mr. Bush's budget] are moving in a favorable direction," he said.
If those reduced spending levels are approved in the fiscal 2002 budget resolutions, as is expected, it would be a major victory for the president's efforts to sharply slow the growth of government to make room for his $1.6 trillion tax-cut plan.
Federal spending has been growing at an annual rate of 6 percent or more over the past three years. Mr. Daniels said that if it were allowed to continue at that rate, "it would add $1.4 trillion to spending in 10 years. We want that trend line down."
Unlike his acknowledged presidential role model, Ronald Reagan, Mr. Bush did not run a campaign based on sharply cutting back government and eliminating wasteful and unnecessary agencies and programs. And Mr. Daniels made it clear that Mr. Bush thinks that fighting some of the agency-by-agency spending cutback battles of past years were a waste of political capital that would not accomplish much.
"I'll acknowledge that we have presented this budget as one that moderates the growth of spending, as opposed to freezing, slashing programs or actually reducing the size of government," he said.
"It's a budget that tries to bring some restraint in spending, as well as one that we hope will bring about a more orderly budget process than the ones we have seen in the past years," he said.
But Mr. Daniels said that the shortened transition made it difficult, if not impossible, to include in this year's budget "the choices and potential program changes that really deserve more time for examination."
The Bush budget contains dozens of spending programs "that we marked off that looked like candidates for substantial change where we were not prepared to make a final recommendation yet," he said.
"There are many more [program eliminations] that we are going to look at in future years. They range from small to very large," he told The Times.
Targets for reductions and reforms include the Agriculture Department's nationwide county field office bureaucracy, and Forest Service field offices that employ 140,000 people, he said.
"In a $2 trillion federal budget, if we can't find programs which are duplicative, obsolete, failed or in some cases have completed their mission, then we are derelict in our duty," he said. "So this is just the first step."
Mr. Daniels said the president's new strategy on the budget "is a very old approach, but new against the backdrop of the last few years. And that is to try to establish a low-ball level of spending and make it stick."
He said he hoped this approach would get "beyond the chaos and brinksmanship of the last few years. We want to show that a Republican president working with a Republican-led Congress can do business in a more businesslike way, one that the American people can at least understand, if not admire."
"There will be give-and-take with Congress in which they will want more spending in some areas," he said, but the administration expects cuts will be made elsewhere to "offset any increases."
Mr. Daniels said that too often in the past Republicans have fought extensive legislative battles to sharply cut or eliminate relatively small programs, which wasted energy and political capital.
"That's the reason there are not a lot of [spending cut] proposals in this year's budget that might generate a lot of heat but not a lot of savings," he said.
"We're going to concentrate our efforts on the big objectives this president has, starting with tax relief," he said.
In response to critics who charge that Mr. Bush's tax cuts could lead to deficits if the surpluses disappear in the future, Mr. Daniels said that OMB used conservative, below-par economic growth estimates to reach its projections. If growth rates stayed at the historical levels of the past 40 years, "it would add $2 trillion to the surpluses" over the coming decade.
"The surplus will be more, not less, than we project," he said.

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