- The Washington Times - Thursday, April 24, 2008

White House budget chief Jim Nussle yesterday said Republicans were partly to blame for the growing budget deficit and deserved to lose control of Congress in 2006 because they did not act aggressively to cut spending when they were in the majority.

In a wide-ranging interview with editors and reporters of The Washington Times, the former Iowa congressman and 2006 gubernatorial candidate also said that the softening economy is hurting corporate tax revenues and overall federal receipts that will likely lead to a higher federal budget deficit.

“The Democrats did not so much win as we lost it. I mean we blew it, [House] Republicans in particular. Some people say we’ve lost our brand. We lost our way, and now we’re paying the price for it,” Mr. Nussle said.

“There were many reasons why the deficit went up. Part of it was the Republicans didn’t do as good a job as they could have managing the spending side,” he said. “Speaking for myself, I think we deserved to lose based on that. You spend a lifetime building up a reputation, and you can lose it overnight. We lost it overnight by the way we handled those things.”

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But the director of the Office of Management and Budget also delivered a stout defense of the unexpected economic, national security and natural disaster challenges that have faced President Bush throughout his two terms in office that Mr. Nussle said were a major contributing factor behind the meteoric growth in spending that for the first time has surpassed $3 trillion a year.

“A lot of things happened in this period of time that impacted [the budget], an attack on American soil, the global war on terror, a recession, the creation of a whole Department of Homeland Security, increased military and intelligence spending, natural disasters here and abroad, and a number of other factors you have to look at,” Mr. Nussle said.

Mr. Nussle, who had just come from an internal briefing on federal tax receipts, said his office is closely tracking revenues in preparation for its midyear budget review. “There already is a downturn in corporate receipts. Corporate receipts are down about 15 percent,” he said.

Asked about how overall revenues were holding up in an economy that most economists think is teetering on the edge of a recession, Mr. Nussle said, “I expect there will be a downturn and that was part of our expectations. We monitor it, but I couldn’t say right now what it is,” he said.

While critics of the administration’s budget policies have fiercely attacked the president’s budget deficits, little or no attention was paid to the “policy deficits” that Mr. Bush has had to grapple with and finance during his presidency, Mr. Nussle said.

“We have dealt with a lot of problems that were deficits as well. We had deficits in our military, in our intelligence, in homeland security that were left by President Clinton. Yeah, there will be financial deficits, but we also had deficits that dollars and cents don’t capture,” he said.

“We’ve had 8 million more jobs created, and the country will be safer,” he said.

Mr. Bush submitted the first-ever $3 trillion spending plan to Congress in February, which called for $196 billion in entitlement cuts in the government’s two health care programs — Medicare and Medicaid. The proposed budget forecast a near-record $410 billion deficit this year and $407 billion deficit in 2009.

“The budget is a realistic snapshot of what it would take in tax and spending cuts to stay on the path we want to be on. We believe we can get to a balanced budget if we adopt these policies,” he said.

Still, he conceded that most of Mr. Bush’s proposed budget cuts stood no chance of being enacted by the Democrat-run Congress. “Congress isn’t willing to take any bigger bite than $70 billion, that’s basically what they told us,” he said.

But the administration still has a lot of work to do on the spending side before the president leaves office, he said.

“I’m not ready to write the last chapter. We’ve got a lot more work to do on the economy, on homeland security, on the military, the war and on the budget,” Mr. Nussle said.

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