Don't rule out more budget train wrecks, says former OMB chief

Jack Lew can make plans for this October. Unlike the past several years, he's not going to spend it locked in the office of Senate Appropriations Committee Chairman Ted Stevens, R-Alaska. As the deputy director,and then director, of the Office of Management and Budget during much of the Clinton administration, Lew was part of the team that hashed out the inevitable annual omnibus appropriations measure. The low-key Lew is properly diplomatic about his time in the Senate chairman's office. "There are worse people to be locked in a room with than Ted Stevens," he said in a recent interview. During the past years, Lew knew early in the year to keep October open, since congressional Republicans never provided enough money in their early budget resolutions for discretionary spending, making an end-of-year marathon negotiation session inevitable. Lew even gave early-in-the-year speeches predicting the train wreck. "If the appropriators are not given the resources to balance [needs], they have very little recourse but to wait until the end," Lew said. "The Congress knows how to avoid a conflict." The key, according to Lew, is to build realistic discretionary- spending caps into the budget resolution. If the budget calls for exaggerated spending cuts, "the system will break down again," he said. Lew believes a train wreck is possible, even with a Republican president, a Republican House and an almost Republican Senate. "I think all the pressures are still there," he said. "It all depends on how big of a tax cut you want." He said the Bush administration's preliminary numbers are questionable. To pay for Bush's full tax cut, "they will have to understate spending," Lew said. He said the administration is reviewing "members' projects"--in other words, pork--from last year's spending bills. Those projects, of course, are very difficult to cut, and calling for them to be slashed in a budget could lead to reliance on smoke and mirrors to budget for the year. "Pretending is not a good way to do budgeting," Lew said. "If you make an assumption like that, you have to deliver." Lew, now a visiting research professor at the Georgetown University Public Policy Institute, said even though his Octobers were busy, he was pleased with the results. "I don't know that it was in the best interest of the [Republican] leadership to have a fight over education at the end," he said. He said a part of him wanted the budget process to move smoothly, but "at the end of the day, when you end up in a conflict situation, you do better. From a congressional point of view, I never understood why they let it happen." The former budget director said new OMB Director Mitch Daniels is going to have his hands full. "He strikes me as a bright and decent fellow," Lew said. Even without much budgeting experience, he added, Daniels will have the support that he needs. But Lew said, "It's a big challenge for anyone. It certainly helped to have the background that I did." Speaking of Daniels, in written testimony before the Senate Governmental Affairs Committee, the new budget director gave a preview of how the administration hopes to avoid train wrecks. He said he understood that the spending in this year's funding bills greatly exceeds the caps for this year contained in the 1997 budget deal. While it is premature to discuss how President Bush will manage the budget, his spending blueprint will "address this issue," Daniels said. He also reiterated Bush's support for a biennial budget process--a proposal that has kicked around for years but has been blocked by appropriators. The budget process also would be simplified if Congress passed a joint budget resolution that would represent an overall agreement among the House, Senate and White House on broad subjects. "Issues would be surfaced earlier in the process and an agreement would be achieved at the beginning of the year," Daniels wrote. Finally, he said he and Bush favored an automatic continuing resolution to fund the government if a spending bill were not enacted by the start of the fiscal year. Under that plan, spending would be set at the lesser of either the amount proposed in the president's budget or the amount passed by Congress for the previous fiscal year. "The threat of a government shutdown has become a prominent feature of the annual appropriations process," Daniels wrote. "I believe a measure of this kind is needed to ensure that the continued operations of government programs are not threatened by political disputes." This idea also has been kicking around for years and has had powerful opponents. The Clinton administration opposed it. Simply put, it would have removed the president's leverage in the spending process. Appropriators opposed it, saying it removes the pressure to finish annual bills. Of course, it also removes a great deal of their own leverage in spending bills. Clinton is gone. But the appropriators remain, and an automatic continuing resolution could be as doomed under Bush as it was under Clinton.