Vacant Cabinet spots could hurt agencies in budget process

In a Dec. 20 press conference, President Bush described the process of assembling the administration's budget request as a give-and-take between the White House and the federal departments and agencies, using the fiscal 2005 budget cycle as an example.

"We worked together, we came up with a budget, like we're doing now, we went through the process of asking our agencies, 'Can you live with this, and, if you don't like it, counter-propose,' " Bush said.

But it seems clear at this point that the 2006 budget cycle has afforded little true give-and-take for a variety of reasons, not least among them the fact that there is almost no extra money to give, and nobody in a position to ask the White House for more.

For those who toil in the federal bureaucracy, the new year dawns on what would appear to be an especially treacherous budget season. With deficit reduction a priority, the president is promising the leanest budget in years, but the White House is locked into spending billions of dollars on sacrosanct defense programs and entitlements, leaving only a narrow slice of discretionary spending to target for major savings.

Making matters worse, many of the departments and agencies that could be ripe for slashing are essentially headless, their top officials having resigned in the transition from the first George W. Bush term to the second. That means that when the Office of Management and Budget goes looking for last-minute cuts, there may be nobody with enough political muscle to "counter-propose."

"The secretary often plays an important role at the last minute," said Alice Rivlin, who was budget director under President Clinton and is now a senior fellow at the Brookings Institution. "If [OMB] does something that the secretary doesn't like, a secretary with a good relationship with the president can appeal it and sometimes win." For bodies without top political people in place, "it could matter at the very end, when they start dividing up the pain."

Stan Collender, a longtime budget-watcher and the author of a weekly column on the subject for NationalJournal.com, said, "Unless a Cabinet department head is willing to go to the mat with the White House on behalf of their agencies, the agency is left being much more subservient to OMB," with fewer opportunities to protest cuts that are particularly painful.

As one senior career official at the Environmental Protection Agency said, "It hurts not to have strong political leadership [in place at the agency], somebody who could go to [OMB Director] Josh Bolten and be heard." A veteran budget official in a federal department whose secretary is resigning said, "When I am planning tactics and strategy ... I assume that if I am going though a transition, I have less leverage the higher the thing goes."

Budget officials say the tight budget, the prolonged budget process, and the increasing centralization of budget decision-making in the White House may minimize the impact of senior departures, simply because there are fewer decisions to be made in this budget cycle.

For starters, the White House has made it very clear that the budget proposal will not include a lot of new money. In his December press conference, Bush said his 2006 budget proposal "is going to be a tough budget, no question about it, and it's a budget that I think will send the right signal to the financial markets and to those concerned about our short-term deficits."

OMB spokesman Noam Neusner said in late December, "One thing you will see is the impact of a long election cycle, in which both major-party candidates talked a great deal about deficit reduction and the need for spending restraint." Bush sees his re-election as a mandate to carry out his agenda, and reining in federal spending is high on that agenda, Neusner said.

Tom Gibson, who was EPA chief of staff under both Christie Whitman and Michael Levitt, said that since the federal budget is generated over a period of many months, relying mostly on the work of career budget staff at the departments and agencies and within OMB, the retirement of the top agency appointee has little impact on the process, particularly this year.

"I don't think it makes an enormous difference unless you have a big-dollar, administrator-level item you are trying to get approved.... [and] we are not in that kind of budget environment" this year. "I'm fearful for EPA because of the overall budget climate, but I am not fearful about EPA being singled out disproportionately" because of a lack of political firepower, Gibson said.

Budget sources said several outgoing Cabinet officials have been surprisingly active in budget negotiations, perhaps out of concern for protecting favorite programs or ensuring that their departure does not damage their legacy.

William Campbell, deputy assistant administrator for human resources and administration at the Veterans Affairs Department, said he expects the department to fare well in the 2006 budget process despite the resignation of Secretary Anthony Principi -- in part because Principi is continuing to manage the department's affairs until his replacement, former Republican National Committee Chairman Jim Nicholson, is confirmed.

Several departments and agencies that have lost top appointees -- such as Homeland Security, Veterans Affairs, or even the National Aeronautics and Space Administration -- are somewhat protected by the fact that their missions are central to the president's second-term agenda. As Campbell said, "While we are in a status of war ... people generally want to do well by our veterans."

But that does not mean such agencies are immune from budget cuts. Campbell pointed out that, for example, the VA general counsel's office is already down to fewer than 650 lawyers, a drop of about 100 positions over the past few years.

According to current and former budget officials, the role of the secretaries in the budget process has been diminished in recent years because this White House exercises so much control. Bush's Cabinet officials have generally been longtime supporters or close friends, and the outgoing appointees are generally being replaced by nominees who are even closer to Bush. Secretary of Education Roderick Paige, who was Houston's superintendent of schools when Bush was governor of Texas, will be succeeded by Margaret Spellings, who served as Bush's top education adviser in both the Texas Governor's Mansion and the White House. As a key architect of Bush's education policies, Spellings is not expected to break ranks with the White House on any issue.

Even if any of the Cabinet officials, incoming or outgoing, were inclined to object to budget cuts demanded by OMB, the president's emphasis on fiscal restraint in the 2006 budget would serve as an additional hurdle.

"The president has been very clear in empowering OMB to come up with a plan to cut the deficit in half in the next four years," said Gary Bass, executive director of the nonprofit OMB Watch. "If OMB comes back to your agency and [demands] a cut, where are you going to go to appeal?"

Budget experts point out that while many of the major budget decisions were made earlier in 2004, before any of the Cabinet resignations, some final decisions were pushed back to late in the year because the budget-planning process was essentially suspended in late summer. The administration saw no purpose in making potentially politically damaging decisions before the election. That meant the major budget scramble took place after the election, and was complicated by the fact that officials were then still operating under continuing resolutions from the 2004 budget. The 2006 budget proposals had to be recalibrated in December after the final 2005 appropriations bill passed, budget officials said.

And until the budget is formally released, there are always last-minute changes to be made. The devastating tsunami that struck Southeast Asia in December sent the U.S. government searching for more aid money to send to the region. Andrew Natsios, head of the U.S. Agency for International Development, told the Associated Press that the administration's initial $35 million tsunami aid package drained his agency's emergency relief fund. "We just spent it," Natsios said. "We'll be talking to the [White House] budget office [about] what to do at this point."

During a December 29 press conference, Bush found himself responding to questions about whether the United States is "stingy" in its foreign aid, and he promised both short- and long-term assistance to the region. He also said that in the wake of the disaster, he is looking into whether the U.S. has sufficient warning systems in place to protect against a similar catastrophe at home. All of these steps have budget implications far into the future, and have set budget officials struggling to figure out where that money will come from.

While the White House has been sparing with details about what programs it wants to trim for 2006, previous budgets offer some hints of how those decisions may be made.

OMB has been developing over the past four years an integrated performance-assessment tool that allows the White House to evaluate the performance of specific programs within the federal government, and to set funding levels accordingly. The president's fiscal 2005 budget proposal said plainly, "Over time, funding should be targeted to programs that can prove measurable results." Budget-watchers note that programs that have continued to score poorly on OMB's "Program Assessment Rating Tool" may be good candidates for cuts in the 2006 budget.

Last year, the White House labeled several programs as "ineffective," including the Defense Department's program for eliminating old chemical weapons, the Education Department's vocational education state grants, and the Health and Human Services Department's Substance Abuse Prevention and Treatment block grants. But officials caution that a failing management grade does not guarantee budget cuts, because programs may be able to improve with additional resources.