OMB Director: Who Says We Can’t Fix the Budget?
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The Fiscal Times
August 18, 2013

Sylvia Mathews Burwell showed up for her first day as the new White House budget director in late April hoping to greet as many of her new employees as possible.

But it was a furlough day at the Office of Management and Budget – so most of the analysts and bean counters were out on unpaid leave.

"I wanted to go and see everyone, go to the red [OMB office] building," she recalled for a gathering of reporters recently. "Not so much. No one was there."

It was Burwell’s first brush with the practical impact of the $85 billion in across-the-board budget cuts mandated this year under sequestration. But Burwell, an affable and unassuming native of West Virginia and a Rhodes scholar, is no stranger to the vagaries of the federal government.

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She was chief of staff to then-Treasury Secretary Robert Rubin during the two government shutdowns of late 1995 and early 1996 when President Bill Clinton battled Newt Gingrich and other Republican revolutionaries. Burwell later served as Clinton’s deputy OMB director between1998 and 2001 before departing for high-profile posts with the Bill and Melinda Gates Foundation and the Wal-Mart Foundation.

Now she’s back in the thick of federal government budget battles, stepping into the role recently vacated by Acting Director Jeffrey Zients (and before him, Jack Lew) – and confronting many of the same intractable issues that marked the mid-1990s upheaval.

BUDGET WORK BEHIND THE SCENES
As Obama’s new budget chief, Burwell is trying to negotiate a compromise with Republicans to blunt the impact of the sequester in the coming year, provide the funding to keep the government operating in the new fiscal year and raise the debt ceiling in time to avert another fiscal crisis. It’s a tall order, to be sure.

Before the August congressional recess, Burwell and other administration officials met privately with a group of conservative and moderate Republican senators – led by Sen. Johnny Isakson of Georgia – who are interested in reaching a compromise with the administration. While the White House has made little headway, Obama continues to press for a deal that would trade a cut in the corporate tax rate for more spending on programs to help the middle class.

"What we’re trying to do is make sure we connect any of these fiscal conversations with their end objective, which has to do with the economy and the middle class," Burwell said during a recent breakfast sponsored by The Wall Street Journal.

And while the administration remains concerned about the long term deficit, she said, "In the near term, what we need to think about are those kinds of investments that are job creating" and that foster a healthy economy.

But the bigger challenge will be making headway with House Speaker John Boehner (R-OH) and rank-and-file Tea Party members who will be difficult to appease. While GOP leaders have signaled their intention to hammer out a continuing resolution to keep the government operating beyond the start of the fiscal year Oct. 1, some are intent on using an increase in the $16.7 trillion debt ceiling late this fall as a wedge to block implementation of Obamacare.

Burwell acknowledged it will be tough to negotiate a deal when Senate and House Republicans are so far apart on strategy and policy substance. However, she viewed the recent collapse of House Republican support for deep cuts in transportation and housing spending as a good omen that it’s possible to forge a budget compromise this fall.

PRICKLY POLICY MANUEVERS
House GOP leaders on July 31 pulled a bill that would have begun to implement the second round of deep cuts under the sequester after many members balked at slashing federal transportation and housing funding by more than $4 billion. In a stern note to House leadership, frustrated Appropriations Committee Chairman Harold Rogers (R-KY) wrote, "Sequestration – and its unrealistic and ill-conceived discretionary cuts – must be brought to an end."

"What we learned is that substantively, people cannot accept the depths of those cuts in transportation, housing and development," Burwell told reporters.

The division suggests there might be room for Republicans to agree to an alternative to the overall $1.2 trillion 10-year sequestration process, which was mandated under the 2011 Budget Control Act after Congress could not agree to specific spending reductions. For now, however, the Democratic-controlled Senate and GOP-dominated House are light years apart on key fiscal matters.

Here is what Burwell had to say on a number of other topics:

* On Obama’s refusal to negotiate the terms of a new debt ceiling:  "We’ve been clear you can’t negotiate about default and you can’t" essentially negotiate government costs already incurred and covered by borrowing. "I think what the president is saying is the question of negotiating about the debt ceiling and how we handle issues like deficit reduction" are separate conversations.

* On time running out on negotiations before Oct. 1:  "Everyone is like, ‘It’s all over.’ No, actually there are two months and I know it’s hard to believe, but there are actually phones [that can be used to continue talks during summer recess]… We shouldn’t all just accept that, ‘Oh, nothing can get done.’ That’s just not true."

* On whether Congress must pass another continuing resolution to avert a shutdown Oct. 1: "I don’t know why we need to talk about a CR right now. Why aren’t we talking about the real deal in terms of getting the work done? Why extensions? . . . Why do we need to ‘kick the can’ down the road again?"

* On whether Obama is trying to torpedo tax reform in favor of corporate tax cuts to finance middle class programs: "I don’t think so," Burwell said, because the middle class spending initiative could be discussed at the same time Democratic Senate Finance Committee Chairman Max Baucus and Republican Ways and Means Committee Chairman Dave Camp attempt to work out a comprehensive tax agreement involving individual and corporate tax rates and elimination of costly tax loopholes. "I think we’ve been clear about the larger deal. We’re open to trying to figure out how to get the big pieces to come together."

Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.