New OMB chief to hold firm against excess spending

Fresh off his surprisingly bipartisan confirmation this month, Office of Management and Budget Director Jim Nussle is beginning to make the rounds, aiming to win the hearts and minds of Democrats in the upcoming budget battle.

But the charm offensive that led to his 69-24 Senate confirmation vote might be coming to a close, with a bit of the rough edges Nussle was known for during his years in the House on display during a Monday interview with CongressDaily.

President Bush has threatened to veto emerging State Children's Health Insurance Program legislation and appropriations bills that are $23 billion over his fiscal 2008 budget request. Even as he was starting meetings with key Democratic leaders and members of the Appropriations and Budget committees this week, Nussle, the former House Budget chairman, made it clear that he is not about to give ground on Bush's demands.

"The president has made it very clear, and this is the same standard he's used with Republicans the last six years -- he sets the top-line number and he's going to hold to it," said Nussle. "I don't feel as if I need to reinterpret what the president said."

But, Nussle added: "I don't think anybody is necessarily setting up for a fight. Hopefully we can set up for a conversation."

That conversation might get off to a rocky start.

Nussle lambasted the outlines of SCHIP legislation Democrats hope to send to Bush's desk by the end of the month as "veto-bait" and a "political strategy" to paint the administration as insensitive to low-income children more than a serious effort to renew the program.

"What they're doing is choosing political strategy over kids ... they can't get their work done, so they're going to send up something that they know is veto bait," Nussle said. "Everyone knows that; it's been as telegraphed as just about anything around here."

From a philosophical standpoint, Nussle rejected the proposed expansion of SCHIP and efforts to finance it through a cigarette tax increase.

"I think it will end up basically being the first big tax increase on the part of the Congress, and the president's been clear on that. So here we have another situation where we had an opportunity to improve a program that had unsustainable growth, and that was serving people outside of its ... original intent, and actually causing, potentially causing, people who were already under private insurance to potentially shift to government-run insurance, and that seems to be counter to everyone's intent," Nussle said. "So we'll have to look at it. But at this point in time, it looks more like a political strategy in search of a potential solution."

Democrats Monday answered Bush's veto threats by pointing to his 2004 campaign, saying he promised to enroll more children eligible for health insurance.

In a floor speech, Senate Majority Leader Harry Reid, D-Nev., pointed to the bipartisan support for the Senate bill and said the Senate "will not be intimidated by the president's veto threats."

A spokesman for House Speaker Nancy Pelosi, D-Calif., noted that all but three Republicans supported the proposed cigarette tax increase in the House version as part of a GOP motion to recommit, and that the majority of the bill's $272 billion, 10-year cost was financed by Medicare spending cuts.

"We will get a bipartisan bill to the president that insures millions more children, that is fully paid for and does not increase the deficit. For the sake of America's children, we hope the president will sign it," said Pelosi spokesman Nadeam Elshami.

The stalemate over SCHIP mirrors that over fiscal 2008 appropriations, as none of the 12 annual spending bills are likely to make it to Bush's desk in time for the end of the fiscal year on Sept. 30. That means an interim continuing resolution will be necessary to fund government operations, as will a short-term extension of the expiring SCHIP.

Despite the $23 billion difference over spending, Nussle brushed aside talk of a government shutdown.

"I don't choose to speculate about a train wreck when ... we still have time and ability to avoid one," he said. "I think the administration is really on board or on message of wanting to avoid that, of not believing that that's the best course for our government or the administration to have that kind of thing happen."

How Democrats and Bush bridge that gap is unknowable at this point, Nussle said, as no appropriations bills have been sent to the president's desk.

"The interesting thing about this timing in the process every year that I've watched this is that there are just so many moving pieces that it's hard for anyone to know," Nussle said. "There may be some who believe they can envision how it will look, but there are so many things that can decide that, so many issues that are moving."

Nussle said even how long to extend the CR is a bone of contention, as Democrats wrestle with scenarios ranging from a month to a month-and-a-half.

"If you make the CR go all the way to Thanksgiving ... that provides different pressure points than if you make the CR just go for about a month. So where are the backstops to help produce pressure in order to help produce results, is really often what conversations" take place, he said. "My suggestion is, and my preference is that ... the more you can put some deadlines into the process, the more urgency is usually placed into the discussions and conversations and therefore decisions."

Supplemental spending for operations in Iraq and Afghanistan will need to be resolved by the end of this calendar year, Nussle said, although he said he did not know exactly when current funding will run dry.

The White House has requested another $150 billion, and predictions are that figure could rise closer to $200 billion, although Nussle gave no indications when an additional request would be forthcoming.

"The president on Thursday night made the decision about embracing the strategy in the [Gen. David] Petraeus report, gave that decision to the administration and [Defense] Secretary [Robert] Gates. Secretary Gates is now looking at that and trying to put that into form, I would assume both in terms of military strategy as well as cost, and then submits that to us."

He acknowledged war spending might be a bargaining chip for the Democrats to use in angling for more domestic funds, noting they wrestled an additional $17 billion into the May war supplemental in return for backing down on troop withdrawal deadlines.

"Darn right there ought to be wiggle room, but why is it always up-wiggle? There's never down-wiggle," Nussle said.

Despite his policy differences with the Democrats, Nussle maintained that he was unfairly painted as overly partisan during his confirmation process.

"It's interesting because they all said, they all used the word, you know, 'combative,' but they couldn't come up with a time that I was," Nussle said. "I've already been reaching out to the Hill and the Hill has been reaching out to me, so that part I think has been pretty natural. Again a lot of the maybe gratuitous comments that are made during a nomination process melt away quickly to collegiality."