White House Seeks to Curb Tax Cuts, Spending

The Bush administration is trying to staunch the flood of tax-cut and spending plans in response to the September terror attacks, fearful that they could overwhelm the budget, damage the economy and saddle President Bush with a big-government legacy.

The latest effort came Tuesday when administration budget director Mitchell E. Daniels lambasted lobbyists, lawmakers and even administration officials for coming up with more than $120 billion in spending proposals on the pretext of helping secure the nation from more attacks and the stumbling economy from recession.

“It might be autumn everywhere else, but in Washington it’s springtime for big spenders,” Daniels said in an advance text of a speech scheduled for Tuesday night in New York. Aides later said Daniels would soften the blow by dropping the word “big.”

The budget director’s remarks, which seemed certain to rankle members of Congress who have been chafing to do something in response to the attacks, were the latest in a series of White House efforts to rein in increasingly elaborate tax and spending proposals.

On Monday, the White House responded to insurance industry calls for help in paying claims from future terrorist attacks by offering a plan that would cut in half the duration of government aid and dispense with a new, federally backed program.

Last month, administration officials tried--though without much success--to limit post-attack aid to the troubled airline industry to $5 billion in cash and some other assistance. Congress eventually approved $15 billion in aid and loan guarantees.

Daniels said Tuesday that Bush is seeking to impose another limit as well, on the size and shape of the economic stimulus package making its way through Congress.

The president has called for the package to be no bigger than $60billion to $75 billion and to go largely for corporate tax cuts. The text of Daniels speech repeated that call Tuesday night.

But in a mix-up that brought a quick response from congressional Democrats, White House spokesman Ari Fleischer suggested Tuesday that the administration might be ready to accept the $100-billion stimulus package approved by the House Ways and Means Committee on Friday. Fleischer said some of the difference is a matter of accounting and some could be whittled down during the legislative process.

“If we’re at war, then we ought to act like it,” said Rep. David R. Obey of Wisconsin, the ranking Democrat on the House Appropriations Committee. “In World War I and World War II, we didn’t tell people you have to sacrifice by taking another tax cut, especially not one that goes to wealthiest 1% of Americans.”

The White House appears to have been taken by surprise by the sheer size of the economic ripples set off by the September attacks and by the torrent of proposals for corrective spending and tax cuts. In contrast to its national security team, which has operated with relative smoothness from the very first days of the crisis, the administration’s key economic policymakers--Daniels, Treasury Secretary Paul H. O’Neill, chief economic advisor Lawrence B. Lindsey and R. Glenn Hubbard, chairman of the president’s Council of Economic Advisors--appear to have ad-libbed much of the early response.

The result has been a series of mix-ups in which one official appeared to contradict another. Early on, for example, O’Neill counseled that Congress should go slow in approving relief measures, while Lindsey called for bold action. As recently as Tuesday, Daniels and O’Neill had trouble hiding their distaste for the size of the House’s $100-billion stimulus package, while more political operatives such as Fleischer seemed ready to accept it.

But amid the flurry of mixed signals, the outlines of the economic team’s approach are beginning to become clear. First and foremost, it involves trying to limit government’s responsibility for particular industries or economic sectors, even as Washington’s role in the overall economy seems set to expand in the wake of the attacks.

Daniels said the principal aim of such limits is to ensure that the nation’s military aims remain clear. “The nation now has two overriding public goals: defeat terrorism and defend the homeland.... Lesser priorities will have to yield,” he said in his speech.

But Daniels also said White House policymakers see themselves as protecting the Treasury from financial raids by special interests. He was withering on this subject both in his speech and in a telephone interview on his way to New York.

“The funds the nation wants to devote to assisting victims [of the September attacks], protecting our people and conquering terror are now the target of opportunistic spending sorties masquerading as ‘emergency’ needs,” he said. “Tree trimming does not qualify as disaster relief, peanut subsidies as national security or permanent expansions of government as emergency response.”

Daniels said lobbyists, lawmakers and federal agencies have submitted more than $120 billion in proposals for the $40-billion emergency spending approved in the immediate aftermath of the attacks.

“With a little imagination, any straight-faced advocate can recast his pet program somewhere under the inviting headings of war, recession or disaster recovery,” Daniels said.