Bush team eyes earmarks, may push biennial budget plan

When he was arguing along the campaign trail for tax cuts, George W. Bush liked to say that as the budget surplus piled up, Congress--especially "the appropriators"--would sooner spend it than pay down the federal debt. As the Bush team prepares its budget blueprint for release later this month, it has come up with some potent evidence to bolster the President's claim.

Staffers at the Office of Management and Budget who have been scrubbing the fine print of the spending bills that Congress passed last year have counted 6,183 provisions earmarking funding for specific programs or projects in lawmakers' states or districts. That number, budget analysts believe, is far higher than in previous years.

"People say earmarks are part of the grease that makes government work, and to some extent, that's true," said John Cogan, a Stanford University economist and former OMB deputy director who headed the initial drafting of Bush's budget blueprint as a member of the transition team. "But 6,183 earmarks is an awful lot of grease."

In addition, OMB tallied up the new entitlement spending that was enacted last year. It found that Congress created or expanded about two dozen programs at a cost of roughly $200 billion in new budget outlays over the next 10 years.

The Bush team realizes it can't undo last year's spending binge. On entitlements, the administration is prepared to look at tightening eligibility standards for programs enacted in 2000, but repeals of the programs are unlikely. Even the vast majority of the 6,183 earmarks will survive. With larger budget issues to address, the White House will probably find the political cost of killing the pet projects of individual members of Congress too high.

But the earmarks could become an important symbol that the Bush team highlights to argue for budget reform and spending restraint. "The question is, do you have 6,183 projects in the next fiscal year, or can you use some of that money for debt reduction or research grants that are competitively awarded?" Cogan said.

Former OMB Director Leon Panetta believes that approach is good, so long as the Bush White House is willing to hold the line later this year. "They are going to have to back it up with vetoes and very tough bargaining with the Congress, because the nature of how business is done in Congress is the business of earmarks," said Panetta, a former chairman of the House Budget Committee. "It is unfortunate, but it is reality."

Another budget reform that might be previewed in Bush's blueprint is biennial budgeting. Bush endorsed the concept during his campaign, but it's not going to be incorporated in his first budget submission. And with midterm elections coming in 2002, Bush's advisers are not optimistic that biennial budgeting could be implemented that year, either. This could push the target date to 2003.

Holding off on two-year budgets struck Panetta, a supporter of biennial budgets, as another smart move. "You can't slam-dunk biennial budgets in your first year," he said. "It is a big battle with appropriators, and you don't have to have that headache in addition to getting your feet on the ground and getting your budget done."

In all, Bush's upcoming budget blueprint may be a key document for guiding fiscal policy during his first term. Panetta said the blueprint is the "most important" policy document the White House will release this year, "because it is the foundation that determines whether they can get any of their priorities done." But Panetta cautioned that the Bush team must be prudent: "When they put that blueprint out, it's going to tell us an awful lot about whether the administration is going to be straight with the American people about what it can accomplish, or engage in gimmicks."

Official Washington is watching particularly closely to see whether the Bush blueprint and the upcoming OMB forecast concur with the latest estimate of the Congressional Budget Office--that by 2006, the government will run a surplus that exceeds the amount of long-term debt that has to be paid off to bondholders. "This change is enormous and profoundly affects the debate on Social Security and taxes," Cogan said.

Because Bush's top advisers understand that drafting a budget is a daunting assignment for a new President, they started their preparations even before Bush was certain he would be moving into the White House. The task got under way in early December, when future White House Chief of Staff Andrew H. Card Jr. and Deputy Chief of Staff for Policy Joshua Bolten tapped Cogan to head the project.

Among those who worked with Cogan in drawing up the blueprint were several Bush campaign advisers, including fellow Stanford economist John Taylor; Columbia University economist R. Glenn Hubbard, who was deputy assistant secretary for tax analysis at the Treasury Department under Bush's father; and Timothy J. Muris, a George Mason University law professor and former executive associate budget director for President Reagan.

Also pitching in were Darrell Trent, a management expert who was deputy secretary of Transportation during the Reagan administration; Austin Smythe, a former Republican assistant staff director for the Senate Budget Committee who now works for the investment banking firm Lehman Brothers; and Amy Smith, former GOP chief economist on the Senate Budget panel who is assuming that post at OMB. Former Reagan speechwriter Clark Judge, now managing director of the White House Writers Group, a Washington strategic communications consulting firm, has helped organize and write the first draft, which will be fine-tuned by the new OMB team.