OMB Director Warns on Budget Spending

WASHINGTON – The White House budget chief warned Congress on Wednesday not to play Santa Claus with taxpayer money this election season as federal revenues continue to fall short of expectations.

Given the slow economic recovery and the $180 billion shortfall in expected revenues, any padding of the budget to pander to constituents this election season would seriously compromise fiscal revitalization, said Mitch Daniels, director of the Office of Management and Budget, during a speech to a group of Republicans.

Daniels referred specifically to the Senate, which has yet to pass a budget blueprint, but has promised to exceed the president spending limit request by at least $13.5 billion dollars.

"The economy is growing, but just not enough. Thirteen and a half billion is not pocket change," he said.

Political maneuvering in the House and Senate has forced the budget process to a near standstill, with lawmakers afraid to make tough spending decisions before the November election and fighting among themselves over how much to spend.

Both chambers of Congress have completed only two of the 13 annual spending bills for the 2003 fiscal year, an unusual occurrence for even a politically charged session, experts say.

Congress has passed two continuing budget resolutions to extend the 2002 budget beyond the end of the fiscal year, which ended Oct. 1. These resolutions allow the budget to be funded at the previous year's spending levels.

The new deadline is Oct. 11 -- a timetable players in both chambers so far say they will not be able to accommodate.

Sponsored by the Main Street Partnership, a group of moderate House Republicans, Wednesday's speech by Daniels inevitably led to a discussion of the impasse between moderates and conservative GOP members over the Labor/Health and Human Services spending bill.

While conservatives want to keep levels down to the president’s request, and in some cases even below what has already been authorized, moderates say that critical education and health care programs would be left underfunded.

"It’s not just education, it ties in low income heating, Pell grants -- a whole area of programs that have been underfunded," Rep. Mike Castle, R-Del., president of the Main Street Partnership, said of college loans and other government programs.

"In the case of No Child Left Behind," the education act passed last year, "we have made a commitment to do more," Castle added.

An additional problem with the Labor/HHS budget is that while conservative House members want to hold down spending, Senate members are going home to constituents promising billions more in education and other social services, he said.

Daniels said Wednesday that holding down spending shouldn't be too hard, especially since the Labor/HHS budget has grown more than 50 percent each for both education and heath services over the last five years.

"How could that not be adequate?" he asked.

While the president asked for an increase over 2002 levels, the administration firmly believes that extra funding for priority programs can be found in other places within the budget, rather than heaping on more money than the taxpayers have to give.

"It’s time to start weeding out the garden," Daniels said. "I think some unfortunate [spending] habits are in need of being broken now."

Rep. Ralph Regula, R-Ohio, chairman of the Appropriations Labor/HHS subcommittee warned Daniels that such a break "is not doable."

Despite heroic fiscal efforts to keep spending down, too much disparity exists between the House and Senate bills, Regula said.

"You won’t get a conference report," he warned about an inability to reconcile the two versions.

Castle said that some members are willing to put off a vote on the spending bills until March, when a new Congress is in session. He warned that such a move could be fiscally disastrous, especially at a time when the U.S. appears to be moving towards war with Iraq and funding great security efforts at home.