Conservatives win White House meeting on Katrina offset ideas

Seeking to assuage their political base, White House officials met with House Republican conservatives Thursday to discuss ideas for offsetting the spiraling cost of hurricane relief and reconstruction.

According to sources familiar with the meeting, OMB Director Josh Bolten met with Rep. Mike Pence of Indiana, the Republican Study Committee chairman, Rep. Jeb Hensarling of Texas, who heads up the group's budget task force, and Rep. Jeff Flake of Arizona.

On Wednesday, the group unveiled spending cut options dubbed "Operation Offset," that were quickly praised by conservative spending watchdog groups. But House Republican leaders were generally lukewarm to the plan, and administration officials did not comment. The White House meeting demonstrates the Bush administration's concern with eroding support among conservatives because of the explosion in federal spending on its watch.

President Bush Thursday indicated that the White House might come up with suggestions for offsets once it has a better idea of the total cost of disaster relief.

"We're in the process of understanding the size and scope of the federal response, so that we can then say to Congress, 'Here is what we anticipate over the next several years the cost will be, and here is our expectation in how we can pay for it, and here are some offsets,'" Bush said during an appearance at the Pentagon. "And we're beginning to make those kinds of suggestions."

A Pence aide said, "We're happy the White House was willing to sit down and talk about our ideas so soon after we unveiled them."

Some of the conservatives' ideas, such as delaying the new Medicare prescription drug program for one year, are seen as non-starters. But others are being taken seriously, particularly with regard to entitlement savings greater than the $34.7 billion agreed to as part of the FY06 budget resolution that Congress will tackle as part of reconciliation. "There was no drawing lines in the sand anywhere," another aide familiar with the meeting said.

OMB declined to comment directly on the RSC plan but a spokesman said: "We certainly welcome the interest from Congress in savings. The president has charged us with looking at savings and offsets." He noted Bush's FY06 budget requested $20 billion in discretionary program savings "that hasn't been acted on yet" and $69 billion in mandatory savings "that Congress reduced to $34.7 billion." The darkening deficit picture demonstrates "that Congress definitely needs to move forward with reconciliation now more than ever," he said.

Spending watchdogs in the Senate are gearing up for a similar offset push. Sen. John McCain, R-Ariz. and five other fiscal conservative senators today unveiled their "menu" of savings options by reducing the growth of non-defense discretionary spending, as well as delaying the prescription drug program and rescinding $24 billion in highway bill "pork." By their calculations, simply allowing domestic discretionary spending to rise at a 3.4 percent rate each year, the average annual growth between 1995-2000 -- as opposed to 8.4 percent between 2000-04 -- would save $381 billion over five years.

-- Keith Koffler contributed to this report.