Nussle Hustles On Budget

Two years after he ended his sixteen-year career in Congress with a losing bid for governor of Iowa, a few months after ending his assignment as Iowa campaign chairman for Rudy Giuliani, Jim Nussle officially made his debut yesterday as the voice of the President’s budget for Fiscal Year ’09.  Drawing on his stint as chairman of the House Budget Committee, Nussle — now director of the Office of Management and Budget (OMB) –made a case to the White House press corps for reducing the deficit, slashing government programs (albeit small ones), and an increased budget.

“Continued economic growth is the most critical element of putting together a budget like this or any budget,” declared Nussle. “If you’re going to reduce the deficit, of getting back to balance, addressing the long-term challenges our country faces, it’s crucial to have good, strong economic growth.”

Although the current “economic growth package” now before Congress and with a price tag of $145 billion will raise the deficit by that much, Nussle conceded, “ we believe that this up tick is temporary, and is also a manageable budget deficit if we keep taxes low, if we can keep the economy growing, and if we can keep spending in check.”

Turning from the issue of deficits and revenue, the budget chief underscored the Administration’s belief that “Spending is the problem. We need to do more to keep spending in check in order to balance the budget by 2012 and address the longer-term spending challenges. The budget proposes to keep non-security discretionary spending at below 1 percent growth in 2009, and then we hold it level for the next four years. It also terminates, as the President announced during the State of the Union, 151 — or it significantly reduces 151 programs, which totaled about $18 billion worth of savings in the first year alone.”

How Many Progams Are  Being Cut?

The inevitable question of just how much government is being cut and how many programs are being eliminated came up quickly:  “You mentioned 150 programs that the President wants to either cut or substantially reduce. How many of those programs have you proposed the same reductions in the past?”

“[F]irst of all, it’s an excellent question,” shot back Nussle, “the 151 programs, I went back and asked for some numbers on this. It’s pretty interesting, because I wondered too; I was like you, I thought, wow, 151 programs, is Congress really going to look at this? In [fiscal year] 2008 we proposed 141 programs and we had 29 of them — for reduction or elimination, 29 of them, even under a Democratic Congress, were eliminated.

"And so there is a track record here that if we send up good information and ideas about the outcomes, whether or not a program is working well under our program assessment rating tools that we apply to these programs, we do get good cooperation. We had 44 eliminated in 2007; we had 89 eliminated in 2006. And the amount of money as a result we eliminated, so the total was 91 programs, and we saved over $10 billion in that exercise alone.

"So this is not small money, and it is a worthwhile exercise. Even if Congress disagrees on maybe all 151, I think it’s an important thing we ought to do."

Have most of these cuts been proposed before, came the predictable follow-up question.

“No, not ‘most, ’ replied the OMB director, “I think what we’ve tried to do is we’ve gone across the government and said, continue this project of oversight through all of these programs, and find out which ones are working, which ones aren’t, and when we find one that’s working, we fund it. When we find one that isn’t, we make a determination whether it ought to be reduced or eliminated. And that list continues to be updated every single year. So some of these may be ones that have been recycled from last year, but many of them are new ones that we continue to take a look at throughout the rest of the year.”

What Price Defense?

Regarding defense spending — tagged at $606 billion (when the Department of Energy and supplemental funding are included)  — another colleague of mine noted that this “adjusted for inflation, is more than the peak of the Korean War and the Vietnam War. Is this — do you have a realistic expectation of getting anything close to this with an opposition Congress, or is this a beginning negotiating point?”

“Well, Congress needs to decide what price is worth protecting our country. And we have made the decision that these amounts are worth it, that certainly there are other challenges our country faces — you could add Homeland Security, certainly, to that. There’s a number of other ways that we provide the kind of security that our country needs. Security is worth whatever it takes in order to make sure that we’re secure, because in all of this conversation we just had about — you can talk about anything — education, health care, Medicare — it means nothing — our economy will collapse if we are not able to protect our country and protect our way of life. So it’s worth whatever we need to spend. And we’ve made, I think, a very careful determination of what that is.

"So I don’t believe it’s just a negotiation point. I think it’s what it takes in order for us to be safe and to be the kind of superpower that can maintain that safety."

As to why defense spending is going up when troops are being withdrawn from Iraq, Nussle revealed that he “had the chance to talk to Secretary Gates about that, and we’ve explored that with him. Obviously, that hasn’t occurred yet, and there is, obviously, cost to a drawdown. And sometimes those costs can be surprisingly high. But what I would like to do is direct you to the Defense Department to get kind of the specifics on all of that. I’ve had a little bit of a rundown, but if I tried to do it here off-the-cuff, I’d probably not do a very good job. They could probably do a much better job of explaining some of the reasons why those costs fluctuate the way they do. But I think it’s a good budget, and it’s one that Congress ought to consider.”

Why No AMT Patch?

Nussle closed by answering a question on why the Administration has not approvaed a patch on the Alternative Minimum Tax after the 2008 taxpayer year.

“I think the issue here is that the President doesn’t want to just patch it. He believes it should be fixed, and should be fixed permanently, and should be part of a comprehensive tax reform,” said Nussle, “It’s the reason why he promoted that within his tax reform commission. He is ready to work with Congress in order to reform taxes; has been since he came to office. It’s the Congress that seems to only want to deal with this in a piecemeal sort of — every year sort of way. We believe that this should be done as a comprehensive matter and not done in a piecemeal way. So that’s the reason why we don’t patch it: We believe it ought to be fixed as part of comprehensive tax reform.”