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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