OMB Director Looks Ahead to FY 2003 Budget: Priorities and Performance

“When a budget goes to war, what should it look like?” This was one of the questions raised by Mitchell Daniels, Director of the White House Office of Management and Budget last week at the National Press Club. In answering these questions Daniels offered important insights into the Bush Administration’s approach to the FY 2003 budget. In offering his views, Daniels lauded the National Science Foundation for its performance, stating it was an example of a government program that deserved to be fortified and strengthened.

The Administration is now working on the budget request it will send to Congress early next year. Conditions have changed dramatically in the last three months: the nation is at war, the economy is in a recession, and projected federal budget surpluses have disappeared. “On September 11,” Daniels said, “the two World Trade towers were not the only structures which were brought down, and one could say that the twin towers of America’s fiscal health and strength were leveled at essentially that same time.” He then stated, “it is regrettably my conclusion that we are unlikely to return to balance in the federal accounts before possibly fiscal [year] ’05.”

Daniels described the “work on the new priorities of winning the war against terror and defending Americans, whatever it takes here at home, and we will make all necessary adjustments in able to fund those new imperatives.” In outlining how this would affect OMB’s approach to the FY 2003 budget, he said “the conquest of evil and the protection of Americans in their homes and in their homeland requires no mandate. And we will err on the side of being thorough. It may be an unfamiliar sensation to my colleagues at OMB, but the guidance I gave them as we began to put next year’s budget together was anything touching those two goals, we will err on the side of action, and we will break ties in the direction of yes. This is not our typical MO.” He continued, “The real question is not will we adequately, thoroughly fund these imperative priorities. The real question is will we be able, collectively, to scrutinize the secondary?”

OMB officials have repeatedly stressed the Administration’s intention to measure the effectiveness of government programs, and Daniels discussed this plan in his remarks: “long before September 11 we were at work in the Bush administration hoping to do better about that; hoping that very seriously, even with the inaccuracy and imprecision that may attend this, to identify those programs and those aspects of government that work well and reinforce them. And as your [luncheon] guest today, I was offered very generously the chance to bring three guests with me to the head table, and I have taken that opportunity to invite three managers of excellent federal programs, who I hope you will welcome and salute.” Daniels’ guests were senior administrators from the National Science Foundation, National Weather Service, and Food and Nutrition Service.

Daniels introduced his guest from NSF: “representing another of the . . . true centers of excellence in this government, the National Science Foundation, where more than 95 percent of the funds you provide as taxpayers go out on a competitive basis directly to researchers pursuing the frontiers of science, a very low overhead cost. It has supported eight of the 12 most recent Nobel Prize awards earned by Americans at some point in their careers. I was to have, as our guest today, Dr. Margaret Leinen, who helps runs that program, but she is in Antarctica, studying very carefully, I’m sure, one of the grantees, and in her stead, Dr. Robert Eisenstein, who you met earlier, Assistant Director for Mathematical and Physical Sciences. Thank you and the foundation for all you do.

“Programs like these, and there are many, many others, that perform well, that are accountable to you as taxpayers for reaching for real results and measuring and attaining those results, deserve to be singled out, deserve to be fortified and strengthened.”

OMB’s plan to measure program performance was discussed by another OMB official last week at the DOE/NSF Nuclear Science Advisory Committee meeting. These remarks will be the subject of a forthcoming FYI.