The Upcoming Budget Battle

Jim Nussle knows the budget process as well as anybody. Not too many people go from House Budget chairman to Office of Management and Budget director in the course of a career. And now he faces congressional Democrats in the final year of the presidency. The trick for Nussle is to make this battle interesting enough to the press that they pay attention in an “American Idol”-type presidential campaign year.

The budget process is not very interesting. Outside the Beltway, people don’t know what reconciliation is. They don’t care about earmarks. They don’t know the difference between discretionary and entitlement spending. They just know that the dollar is weakening and that things cost more this month than they did last month.

So the challenge for Nussle is to reconcile what the Congress is doing with the budget with what the American people expect from their government, and then make it interesting enough for the press to cover.

Earlier this week, he sent a letter to the Budget Committee chairmen on both sides of the Rotunda laying out the president’s priorities: Keep discretionary spending in check; reduce mandatory spending; cut earmarks in a half; and prevent tax increases. That’s a pretty tall order when you are talking about a Democratic Congress.

Why are these priorities important for the White House, and what are the stakes for the American people?

On the spending side, wasteful discretionary spending is typified by out-of-control earmarks. The earmark problem is bipartisan. But the earmark fight is institutional. When the executive branch is able to target earmarks as wasteful, they are winning the tug-of-war with the Congress. That is why you will see tough resistance from both sides of the aisle to earmark reform.

The discretionary fight is not nearly as important as the mandatory fight. But it is an election year. And unless Nussle can put the mandatory fight into terms that the American people can understand, he will lose the battle. In the 1990s, when John Kasich fought the battle to balance the budget, he put it in terms of interest rates. Today, Nussle should translate it in terms of gas prices. The dollar has grown weaker because our debt is so high. A weak dollar means higher gas prices. Getting a hold of entitlement spending will translate into lower gas prices.

The tax fight is harder than it seems on its face. Most Americans are not concerned about their income taxes going up because most Americans don’t pay income taxes. In fact, polls show that of those Americans who pay taxes, their chief concern is that their tax money is being put to good use, not that those taxes will go up. As Nussle goes into the budget debate, it is not enough to say that he will fight to keep taxes low. He must talk about how tax increases in a recession will kill jobs.

Jim Nussle has been through the wars. He is widely respected on both sides of the aisle for his commitment to the budget. But perhaps his biggest challenge will be to make the budget process an important part of the story in this crazy election year.