Mitchell E. Daniels Jr. Office of Management and Budget Established: 1970 2003 Budget: $71.0 million Full-time Employees: 510 Daniels's salary: $171,900 Web Site: www.whitehouse.gov/omb/ Overall Grade: B Back To Overview And Other Cabinet Grades

National Journal
© National Journal Group Inc.
Friday, Jan. 24, 2003

In the Washington money game, the director of the Office of Management and Budget is always the designated bad guy on behalf of the president. The current OMB director, Mitchell E. Daniels Jr., has taken the bad-guy role to a new level, at a time when bad economic news has put President Bush's fiscal management under a microscope.

Daniels "has a tendency to say what's on his mind, no matter how acerbic it is," said Paul Light, a senior fellow at the Brookings Institution. "He certainly has developed a reputation in town that is pretty nasty." Nevertheless, Light conceded, "as far as OMB directors go, he's pretty damn effective." Light's view was shared by numerous administration officials, lobbyists, members of Congress, and outside budgeteers.

Bush, who chose Daniels because of his business background and his experience as chief aide to Sen. Richard G. Lugar, R-Ind., is happy to have his OMB director take the heat for attempting to slow the growth of federal spending after eight years of growth under President Clinton. In fact, Bush, unlike Clinton, has shown little interest in the details of the budget and has nicknamed Daniels "The Blade" for his willingness to do the dirty work.

But Daniels's effectiveness has been somewhat diminished by a series of pointed fights with the congressional appropriators he's been trying to rein in. At times over the past two years, those blowups have left appropriators refusing to talk to Daniels. Senate Appropriations Committee Chairman Ted Stevens, R-Alaska, once even complained that Daniels was not serving the president well and should go home to Indiana. And James Dyer, the House Appropriations Committee staff director, contended: "I don't think you can look at his record and say he's been very successful on the Hill."

On the contrary, Daniels, 53, is quite well regarded among conservatives and budget hawks on Capitol Hill, and their point of view may prevail in the belt-tightening days ahead. "I think Mitch Daniels has done an outstanding job," said Rep. Patrick Toomey, R-Pa., who is in charge of monitoring appropriations for the House Republican Study Committee.

For conservatives such as Toomey, the bottom line is this: In fiscal 2001, spending grew by 8.6 percent under Clinton. In fiscal 2002, Bush and congressional leaders in the immediate aftermath of 9/11 agreed to an 8 percent spending boost. But under the pending fiscal 2003 bills, spending-other than on defense and homeland security-will increase by only 2 percent.

Inside Influence Grade: A
The OMB director is supposed to be the final line of defense on budget decisions before the president himself. And Daniels, a veteran of the Reagan White House, appears to have fit into that role nicely.

Daniels has traveled to various departments to meet with Cabinet secretaries on their own turfs and to explain OMB's initial review of their budget requests. "They have the opportunity to raise issues with him, or he usually gives them the top-down view of what's coming back their way," said OMB Deputy Director Nancy Dorn. Dorn said that in at least two cases, Daniels has changed his mind about funding levels.

According to Daniels, during the drafting of the fiscal 2004 budget, no Cabinet secretary appealed his or her budget directly to the president-a development that Bush welcomed. "It used to be expected that many departments would appeal right through to whoever was president," Daniels said. "Agencies have the full opportunity... to appeal to the president, and fortunately, we didn't have to trouble him."

But Daniels himself was open to appeals. Homeland Security Secretary Tom Ridge appealed his budget to Daniels, Dorn acknowledged. "We came to a very amicable resolution of that," she said. In addition, a further review of the Veterans Affairs budget resulted in an increase in its request.

Dorn said that Daniels has helped increase OMB's influence in the White House. He has gained a reputation as smart, an innovator, and the kind of manager who knows his brief cold. "He's an inside member of the team over here," she said. "At the same time, he's made a point to reach out to the different Cabinet officials on a level that they know that if they have a problem, they can deal with him directly."

In addition, Daniels has tried to reinvigorate OMB's management side after years of neglect-an effort that will be clear in the administration's fiscal 2004 budget request. Daniels has emphasized detailed evaluations of agencies, and Cabinet secretaries live in fear that their department may not measure up. "A Cabinet secretary [recently] asked to see me to make the case that his agency had actually made more progress than we deemed to be the case," said Mark Everson, OMB's deputy director for management.

Hill Clout Grade: C
Daniels got off to a rocky start on Capitol Hill. He blazed into OMB vowing to curb earmarks, or popular set-asides for members of Congress in appropriations bills, but they are steadily increasing under Bush. And after 9/11, when Daniels tried to put a tighter lid on spending than appropriators favored, key members of Congress went over his head and appealed to Vice President Cheney, who persuaded Bush to support additional spending.

All along, Daniels has been publicly critical of Congress, and he has occasionally expressed his deadpan wit and pointed opinions at lawmakers' expense. He once said that Congress doesn't feel it has a purpose unless it is spending money.

In light of such a record, it would be easy to assume that Daniels's influence on Capitol Hill has been neutralized. But he has recently won two major battles. Last August, Bush decided not to spend some $5 billion that appropriators had added to a supplemental spending bill for defense and homeland security. And, even more significant, the administration has succeeded in holding down domestic spending in the fiscal 2003 appropriations bills.

That's not to say that Daniels doesn't remain a controversial figure on Capitol Hill. Rep. David R. Obey, D-Wis., the House Appropriations Committee ranking member, attacked OMB in a December speech on homeland security. "The real issue, the amount we are willing to invest in critical activities to defend the homeland, has been made needlessly confrontational by the White House budget office," Obey complained.

But Republicans who aren't appropriators-including even some of the moderates-say they are pleased with Daniels's performance. "He has as difficult an assignment as anyone in the Cabinet," said Rep. Michael N. Castle, R-Del., a key moderate. "I don't think he's being unfair with what he's trying to do with the budget."

Political Imperatives Grade: B
Bush selected Daniels as OMB director to slow federal spending and to implement a more pro-business regulatory agenda-two jobs at which Daniels has had some success, despite daunting odds. "It's always difficult in this town to be a voice for cutting spending," Toomey said. "The path of least resistance in this town is to increase spending on everything."

Gary Bass, executive director of OMB Watch, called Daniels "masterful at deregulating," and cited his efforts to roll back environmental regulations and workplace safety rules. Daniels gives lots of leeway to John Graham, administrator of OMB's Office of Information and Regulatory Affairs, in that area.

Another critic said that Daniels has been effective in the administration's effort to move more government jobs into the private sector. "He's more of a representative of corporate America than of the citizens," said Bobby Harnage, national president of the American Federation of Government Employees. "His agenda is the president's agenda... a corporate agenda."

Ironically, Daniels may do the most to push the GOP's political agenda by leaving his job and running for governor in 2004 in his home state of Indiana, where Republicans badly want him to run.

Running The Department Grade: A
For years, the annual budget fights between the Clinton administration and the GOP-led Congress meant that OMB had to concentrate on the budget side of its job, and not on the management side. Daniels receives high marks for attempting to find a balance between the two.

In its first budget, the Bush administration gave federal programs red, green, or yellow grades, reflecting how well the program was managed. This year, the administration is doing a more systematic job by instituting a standardized evaluation of many programs. Daniels is "very interested in management," Dorn said. "Whereas this job has so many demands at a different level, it's easy to forget about the management aspect government-wide."

Daniels agreed that it can be difficult to refocus agency attention on management. "One of the least-natural acts is for a political appointee in the U.S. government to spend much of their time and energy and talent actually making the day-to-day business work better," he said.

Daniels began his tenure with a distrust of career OMB employees, but he has since come to appreciate their expertise and loyalty. Still, some bruises caused by the initial jostling remain. Although OMB Watch has been critical of OMB's deregulation agenda, Bass praised Daniels for establishing an open rule-making process by making many documents available on the Internet. "He deserves a pat on the back for strengthening citizen engagement," Bass said.

Need A Reprint Of This Article?
National Journal Group offers both print and electronic reprint services, as well as permissions for academic use, photocopying and republication. Click here to order, or call us at 877-394-7350.