For Immediate Release
Office of the Press Secretary
April 9, 2001
Press Briefing by OMB Director Mitch Daniels on the Budget
Listen to the President's
Remarks
1:17 P.M. EDT
MS.
BUCHAN: We are going to do an on-the-record briefing with
Mitch Daniels, the Director of the Office of Management and
Budget. He'll make a few opening remarks and then be happy
to take your questions.
MR.
DANIELS: Thanks, Claire. Let me first say to
Congressman Spratt, because I heard a question asked about the
timeliness of our delivery this morning, that his aide was actually the
first to receive the budget at 8:30 a.m., waiting at the loading dock,
I'm advised. I can only assume that the eloquence of the
prose and the content of the budget was so captivating that he forgot
to deliver it to the Congressman. But, in fact, the
Congressman's office, I'm happy to say, given his importance in the
process, was the first in Washington to receive our materials this
morning.
Let me just
say a few things by way of introduction, and welcome your
questions. The President's budget is alive and well,
two-thirds of the way through the process to what we think is
successful completion. There's work yet to be done. The
House version, of course, we find fully adequate. The Senate
version, in addition to being short on tax relief for the American
people is long or excessive on the spending side. And we'll
want to work in the conference committee to try to remedy that.
Just to
give you one data point, as best anyone can tell, and the Senate itself
cannot tell you this morning, or today, what it tried to spend last
Friday, but it's at least in the order of 8 percent, perhaps
more. And at 8 percent, which was last year's discretionary
spending growth, if that behavior pattern were continued year on year
through these 10 years, they would spend about $3 trillion of the
surplus, above and beyond what the President has recommended.
So if we
needed further evidence that money left in Washington will be spent in
Washington, or further evidence that the real threat to debt reduction
and to our long-term fiscal health is from government spending, Friday
supplied that evidence.
Beyond
that, I'll simply say that we're pleased that the President's budget --
recommending moderate spending growth, what we think is affordable
spending growth, and enabling the funding of every campaigning
commitment he made, and enabling a reordering of the nation's
priorities along the lines of those he laid out in his campaign -- is
moving toward -- we think -- toward successful completion, after the
conference reports back to both bodies. And we thank the
Senate for its hard work. We thank the House, of course,
especially, and we look forward to the final chapter.
Questions?
Q You
just said that the budget enabled the funding of every campaign
commitment the President made. Back in April, he promised
$100 million for a debt-for-nature swap that you guys are not giving
any new funding to, and as I understand it, diverting $13 million from
USAID funds, their conservation funds, just to basically flat-line the
program.
MR.
DANIELS: Well, $13 million is $13 million. It
will be put in there. As you know, there are carryover
funds, because this program has had real practical problems finding a
place in the world so far where an actual swap can take
place. The commitment, of course, was not for one
year. Like many of the commitments the President made, it
was either for an extended period of time or an unspecified
period. So this is a down payment, and at this point, it's
probably a bigger down payment than we think can be used in this next
year.
Q But
the people who actually propose the legislation -- and these are
Republicans, this is a Republican initiative -- Portman and Lugar are
saying that that's not the case; that the money that you're talking
about has already been earmarked for other programs, it's a brand new
program that's only just started getting funding in 1999, and that's
the reason that you can say that the money hasn't been spent yet.
MR.
DANIELS: Well, let's just hope that the new funds, which are
twice as much as was able to be used last year, will be
used. And then we can continue the commitment in future
years. But this is, like everything else the President
proposed, is something we have honored and will continue to, to the
extent that it proves practical to do so.
Q So
when he said $100 million, he only met $13 million the first year?
MR.
DANIELS: He meant $100 million as quickly as it can be used,
which clearly would not be this year. If it makes you feel
better, we could put $100 million there, and then $94 million would be
sitting in an unexpended account a year from now if the experience of
the last year did not change.
Q On
the 4 percent overall increase, the Center on Budget and Policy
Priorities does an analysis that says, if you take out defense,
international affairs and the disaster relief reserve fund, that it's
really a .4 percent increase for domestic discretionary spending, .4
percent, not 4 percent, which is, of course, is well below
inflation. Is that correct?
MR.
DANIELS: No, it's not. For openers, they should
recognize that the emergency funds were abstracted from the domestic
accounts in which they occurred last year, so that's really more of an
accounting move. And beyond that, I simply refer you to the tables
which will indicate growth on the order that we reported it.
Q The
basic argument on the other side is that you've been forced to cut
valuable programs -- the COPS program, or training in children's
hospitals, or energy efficiency and renewable energy resource
programs -- in order to
squeeze in the tax cut, because the tax cut for the rich, they would
say, is so big you've got to make these painful cuts. What
is your answer to that?
MR.
DANIELS: It's completely fallacious. I think
fatuous might be a better word. First of all, please note
that after proposing the President's tax relief we had a trillion
dollars left over in uncommitted funds. The President did
propose a piece of that for Medicare prescription drugs, but that left
$842 billion completely uncommitted. I'm not counting here
the $600 billion of Social Security surpluses, also left uncommitted.
So there
was ample room, more than enough room, it is more than enough room for
the President's tax relief. As I mentioned, if you let
spending keep running at 8 percent, discretionary, like the Senate just
voted, at a minimum, you would consume about 2x the amount that the
President's tax relief calls for.
Since you
brought up three of the bogus assertions of recent days, let me deal
with them. The COPS program, first of all, does
continue. We spend $855 million on it. And
certain pieces of it increase, for border prosecutors and so
forth. Funding is shifted to an urgent problem, which is
schools -- police at schools.
The only
piece of this nearly billion-dollar program which is redeployed to
these new uses is the hiring program, which has been
completed. It was entirely explicit at the beginning that
this was to be a three-year program. I have, if anyone would
like to use it -- or see it -- the grant application that every single
department in America received when they applied for funds, which says
in six places that this is for three years only, and that they are
responsible to continue the officers. So every officer
funded here over these years will be continued and will remain on the
streets by the terms of that grant.
Q Mitch,
one area where there have been explicit reductions is environmental
protection and some natural resources programs. I believe,
overall, about $2.3 billion down there. Can you explain as a
broad principle what was the reasoning behind those actual reductions?
MR.
DANIELS: Actually, I can explain that environmental spending
has been maintained in this budget. We were extremely
careful about doing that. The President's directive was very
clear. There were 397 earmarked unrequested programs in the
budget of the EPA, and many of them we have suggested should come
out. Please remember that of the redirected funds in this
budget, about a third are in the category of earmarks and unrequested
programs, things the Clinton administration never asked for, and things
that frequently come under the porcine label.
On the
environmental front, the core programs of EPA will be absolutely
maintained. The 17,500 employees now working there, that
head count will be maintained, so that enforcement will be continued,
and I hope enhanced. In fact, we have rotated $25 million of
new money out to states to enhance their own enforcement and oversight
activities.
Q Do
you have a total figure on the earmarked programs that have been axed
in this budget?
MR.
DANIELS: Eight billion dollars.
Q Eight
billion dollars for how many programs?
MR.
DANIELS: Well, there were 6,454 earmarks and I think that
the number of programs roughly tracks. About half of those
were identified as one-time items -- generally a bridge built once need
not be built again -- or earmarks above and beyond anything that
President Clinton had requested. So about half of the $16
billion in total earmarks were marked for deletion.
Q Mr.
Daniels, is it just coincidental that OMB and CBO have precisely the
same surplus number for 10 years, $5.6 trillion? That just
seems remarkably --
MR.
DANIELS I think we're $34 billion off, actually.
Q It
seems remarkable that you came up with exactly the same answer after
calculating everything over a full 10-year period. That's
just --
MR.
DANIELS: It's interesting, isn't it? You know,
these things are done, I assure you, entirely
independently. It doesn't mean they're right, of
course. The private sector analyses are not far
different. And it's because we acknowledge that there's
necessarily a lot of imprecision around these out-year forecasts, that
we tried to leave a lot of flexibility in this budget and a lot of room
in case we are in error.
Q On
the standard on earmarks for elimination, you mentioned those that the
President did not request, I mean President Clinton. Was
that the core standard that you applied to judge whether an earmark was
valid or invalid, whether it had been requested by the Clinton
administration? I ask that because many earmarks were the
idea, concept of many Republicans in Congress, and they did not share
the same budget priorities as President Clinton. So I'm just
wondering if the Clinton standard was the only one you used to judge
the earmarks?
MR.
DANIELS: The principle standards were looking for
unrequested funds, and also those funds of a one-time character.
Q Requested
by President Clinton?
MR.
DANIELS: Either-or, yes. Unrequested by President
Clinton, yes.
Q How
realistic do you think it is to count so much on earmarks not being
replaced? I mean, isn't this sort of the normal way Congress
operates, and if it's one time, it will be replaced by a bridge
somewhere else?
MR.
DANIELS: Well, we did not propose to strip them all out,
which I think would have been an unrealistic
assumption. Member projects, so-called, have been a part of
the congressional process for a long time. And we're not so naive as
to believe they can be ended overnight.
However, I
would not say that last year or the year before were normal years,
because the number of these earmarks has exploded, more than tripling
in the last two years. And so we took what we thought was a
common-sense approach, scaling them back perhaps as much as a
half. We're going to have to work with our friends on the
Hill to suggest that while a degree of earmarking is a natural part of
the process, that it has gotten somewhat out of hand, and we'd like to
see it reigned back in.
Q Just
to be clear on the COPS program, the funding for the cops that have
been hired, that continues to pay their salaries, correct?
MR.
DANIELS: Actually the -- that's correct -- 75,000 is all
that has actually been hired. The program, like many others,
has trouble absorbing as much money as Congress sometimes throws at
it. We believe that when the remaining funds are expended --
and, of course, all three-year commitments are honored -- about 115,000
police will actually have been employed.
And as I
indicated, every single one of them, under an utterly explicit
understanding, both at the level of congressional enactment and at the
level of the individual grant, that this is three years start-up
funding, and that there is an obligation on the part of the locality
seeking that funding to keep that police officer employed
thereafter. So the benefits of the program will continue,
and we simply took the Congress at its word -- silly us.
Q Keep
the police officers funded with local funding, right?
MR.
DANIELS: After 3 years. That's correct.
Q On
Medicare, the Republicans have, I think, doubled your request for a
prescription drug program, I think up to something like $300
billion. Does that sound like a more realistic figure for a
prescription drug program than what you've proposed?
MR.
DANIELS: First, they didn't double it, they simply left
room, as it says, up to $300 billion. And, no, it doesn't
sound more realistic. If you want a really bad prescription
drug program, I can write you one at $400 billion or $500 billion of
cost, I suppose. But the President submitted what we think
is a pretty good estimate, particularly when -- at $153 billion --
particularly when you note that we assume reform, and they don't.
And it will
be, I think, one of the President's principles that Medicare
prescription drug coverage be added in the context of reform of that
program and not simply layered on the top of a program which is going
broke.
Q Even
if it's not Helping Hand that turns out of the Congress, even if it's
some other kind of general reform, you think that $153 billion is
enough?
MR.
DANIELS: Yes. The House passed a bill last year
with no reform that was scored right around $160 billion by
CBO. And therefore, we think that $153 billion is somewhere
in the ballpark. Nobody really knows, and it would depend on
the context of the program, but ours is a good-faith
number. And all the Senate did was indicate that they don't
know either and indicated that they might need to leave room up to
something like $300 billion.
Q How
do you justify reducing energy discretionary spending to $1.6 trillion
from $1.9 trillion, when the President is talking about increasing
supplies, talking about reviving nuclear power --
MR.
DANIELS: Well, first of all, the solution to our energy
problems as a nation will not be found in the budget of the U.S.
Department of Energy. And we should be careful to separate
those two subjects. Half the budget of the Department of
Energy, as you know, is defense-related; it's not related to energy at
all.
The
Department of Energy budget will be 8 percent bigger than it was just
two years ago. And here again the answer lies in earmarks,
in one-time funding. For instance, a very large expenditure
last year was on the after-effects of the Cerro Grande
fire. We had a big debate at OMB and decided not to start
another fire this year. And therefore, we did not renew that
particular $500 million expenditure.
Q --
started the fire last -- (laughter) -- are you acknowledging that?
MR.
DANIELS: We've been accused of worse.
Q Speaking
about energy, I noticed you still include the ANWR
revenue. But even the House budget, which you praise so
highly, doesn't have that. So is there really any realistic
chance of --
MR.
DANIELS: Well, it's silent on the subject. And as
you know, it's a 2004 assumption, and we believe very sincerely that
that program ought to go forward and that, in the context of a national
energy policy, will go forward. And we think it's a pretty
good idea to then to devote those revenues to alternative energy
research about that time.
Q When
the President released the budget blueprint, that triggered a number of
letters from state holders, from Congress offices to you and to the
President. Have you pulled back from any of your proposals
in between the time you released at and this budget, or was this
already on the printing press by the time that was released?
MR.
DANIELS: No. If you read the blueprint, you'll
find those elements in the budget.
Q Given
what the Senate did and where it is on spending, and how far apart you
are right now, are you picking a fight here with not just the Senate,
but the members of Congress who have their own earmarks? Is
this, with your able and energetic defense, a little bit of a combative
stance with Congress on the level of spending?
MR.
DANIELS: No, I think Congress expects that a conference
report will come back at something very different. I have a
sort of tolerant attitude about all the activity of last week, sort of
a boys will be boys notion to this thing. These are pretty
much free votes and I think most members, if you ask them, should spend
and go up between 8 and 10 percent next year, most would say, oh, no, I
didn't mean that. So I think they're looking for the
conference committee to stop them before they kill again.
Q Is
that your scoring, that they added 8 to 10 percent --
MR.
DANIELS: It looks like at least 8, but again, they can't
tell us yet what they voted for, in every detail. The
amendments we can add up are in the 8-percent range, and then there are
some unaccounted for.
Q Are
those the Democratic amendments or the Republican amendments?
MR.
DANIELS: Well, I'm not sure I can assign providence to each
of these. Some of these were collaborative ventures.
Q Mitch,
you mentioned a moment ago that some of those were free
votes. Eventually votes will not be free and real bills with
real money will come to this White House. Is there any
message you'd care to send to congressional staff still here in
Washington during the recess about the veto likelihood of
appropriations bills that either are too high or carry too many
earmarks?
MR.
DANIELS: I'm very careful not to use the V word, and I hope
we'll not need to. From the very beginning, in fact, from
the very explorations before we wrote the blueprint, we visited with
members of both parties in Congress and indicated that while the
President thought that the trajectory of recent years was too much, too
much spending at 8 percent last year, 6 percent average over the last
three years, we wanted to know what was reasonable.
And it
seemed to me, based on the survey we took, that something in the nature
of what the President proposed would be seen as reasonable. This is a
budget that grows, and on a very large base, almost $2 trillion -- and
it grows $103 billion total, counting mandatory spending, and the
discretionary third of that, as you know, by about $26 billion -- a lot
of needs can be met with that kind of growth.
And so the
message, I believe, is let's work together. Let's have a
good debate about the priorities. And the President has
frequently said he never expects to get every single proposal that he
sends enacted, but let's have a debate about priorities within that
reasonable total. And then we won't have to discuss the
extreme measures.
Q You
mentioned the 8-percent increase in spending by the
Senate. I think the single biggest item there was the IDEA
funding, the special education funding sought by Senator Jeffords,
which, as I understand it, is merely providing the money for a mandate
that the government has already committed itself to
provide. Is the administration willing to say that that's
wasteful spending, that you're going to fight to keep out of the budget
in conference?
MR.
DANIELS: I'm not going to apply a label to it. I
will point out that the President has just proposed the biggest
increase in special education funding in history, over a billion
dollars of new money. We worked very hard to do
that. The point is well made that Congress made a pledge --
by the way, this was 26 years ago, this is not a new
issue. The President's budget advances the ball toward the
eventual goal of 40-percent federal share by more than any recent
offering has.
Q But
$1 billion versus $180 billion over 10 years --
I mean, there's really no comparison between the gap in funding and
what's been done.
MR.
DANIELS: The IDEA program, it will be up for reauthorization
next year. I know that our administration will be very
actively engaged in that process. This is a program with
exploding costs and exploding enrollment, and it would be a good idea
to look at reform of the program at the same time we discuss what the
long-term federal investment ought to be.
Q How
concerned are you -- one other thing Democrats continually mention is
that this was built on a house of cards, because the surplus won't
materialize because the economy is going to tank. How
concerned are you that the economy is going to tank and that will
affect your surpluses?
MR.
DANIELS: Well, we're not concerned about the economy
tanking. We think that the economy is struggling along at
the moment with unacceptably low growth, but at least it's still
growing. The heart of your question really is how secure are
these long-term forecasts. And the answer to that is, that
they are necessarily uncertain. They could just as easily be
wrong on the low side as the high side.
I refer you
to CBO for whom $5.6 trillion is the midpoint estimate. They
have estimates as high as $8 trillion. And what I can tell
you about the economy is that even a substantial recession in this
year, which does not seem to be in prospect, would hardly move the
needle over 10 years. In order to really change the 10-year
projection, you would have to have a sustained, slow-growth period on
the order of 1 or 2 percent lower growth than the 3.2 percent that we
forecast.
So if you
look at our revenue projections, you will see we have essentially
assumed a slow growth or even recessionary economy over the next few
years, just out of conservative approach.
Q Mitch,
if, in fact, your estimates of surpluses are below the mark and there
is more money on a yearly basis, can you describe for us the priorities
of the administration as to what's to be done with that extra
money? Is it to be devoted entirely to tax
cuts? Is there a formulation -- one-third, one-third,
one-third more -- whatever? What would happen, based on your
conversations with those involved, in charting the future with that
extra money?
MR.
DANIELS: I think it's premature to say. It's a
very valid question because, again, the chances are at least as good
that revenues and surpluses will be higher than expected, not
lower. They've been higher for five straight
years. And that pattern could continue. So it's a
question that could arise.
I think you
know that the President's priorities are to reduce national debt as far
and as fast as is practical to reform Social Security and Medicare, and
to strengthen our national defense. All of these could be
part of future budgets if the means are there to do it. But,
of course, beyond some level, he thinks these funds ought to belong --
do belong to the taxpayers who earned them.
Q The
House and Senate budget resolutions call for pay parity between the
military and civil service, but the budget, of course, spent 3.6 for
civil servants. What was the decision behind that?
MR.
DANIELS: We think it's the appropriate
level. It's really derived from a 4.1 percent increase,
recognizing that there's a half a percent additional relief coming from
a lower charge for health benefits. So we think that the 3.6 percent
net is the right and appropriate number.
THE
PRESS: Thank you.
END 1:44
P.M. EDT
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