Bracing for a bruising budget battle
Jim Nussle gained early notoriety in Congress when, as a 31-year-old freshman, he appeared on the House floor wearing a paper bag over his head. He pulled the stunt to draw attention to a culture that he viewed as corrupt and "out of control." The display was designed to highlight the bad-check scandal that was then enveloping the majority Democrats. A dozen years later, the Democratic majority is history, and Nussle has grown into the consummate insider, serving his third year as chairman of the House Budget Committee. Except now, instead of a paper bag, Nussle might consider a Kevlar helmet.
As budget chair, Nussle has the task of trying to turn a budget nearly half a trillion dollars in the red into a package that will give President Bush a platform on which to run for re-election and help the GOP retain its slim margin of control in the House. His strategy: to freeze nonsecurity-related spending in an attempt to cut the deficit in half in four years.
Caught in the crossfire. Easier said than done. In attempting what some consider a nearly impossible job, Nussle is caught in the political crossfire of several warring camps who see the federal budget as a chance to write pieces of campaign literature for the election this fall. "The first person who proposes anything is like the first person out of the foxhole. They are going to get shot at," says Nussle. Still, he says, "I love this because it's a challenge, and I love a challenge. I get to set out a vision."
But it is by necessity a vision radically altered since Nussle first assumed the budget chair in 2001. Back then, the possibilities seemed limitless. The federal budget was running record surpluses, and a new Republican president seemed to be the crowning piece to the brightest of futures. Forecasts of $5.6 trillion in surpluses over the next decade allowed the president to call for $1.6 trillion in tax cuts and to demand that they be made retroactive. Nussle had the authority to unilaterally add money anywhere he saw fit in the budget. But then, everything changed. In place of huge surpluses, the Congressional Budget Office is now estimating the deficits will be about $2.75 trillion over the next 10 years. "The thing that has surprised me the most is how quickly fortunes can change," Nussle says. "You can wake up one day and have a balanced budget, September 10, and then wake up the next day and have everything completely turned around."
Needless to say, Democrats have a different take on who and what are to blame for the whopping deficits and the recent economic slump. "When George Bush said during the 2000 campaign that he was against nation building, who knew he was talking about the United States?" asks Rep. Rahm Emanuel of Illinois, a former Clinton aide who is now a member of the Budget Committee.
House Minority Leader Rep. Nancy Pelosi says it will be all-out war when Nussle's spending package reaches the floor. "The budget, in my view and in the view of Democrats, should be a statement of our national values," she says. "We will see these budgets as a contrast. The Democrats' budget will be a statement of our national values. The other will be a tribute to the special interests . . . .We will be there in full body armor, ready for battle."
Obstacles. So far, the Democrats have been the least of Nussle's problems. He's also at odds with the White House, the congressional leadership of his party, and deficit hawks on both sides of the aisle. No surprise, considering his do-whatever-it-takes attitude in his quest to carve the budget. First, he proposed cutting the president's defense budget: "I believe that the Pentagon has not yet demonstrated the kind of austerity that we need," he says. "This is a department that cannot complete an audit of its own books. . . . To me it's disrespectful of our troops if we waste one penny, one penny on something that is unnecessary."
Nussle had initially proposed cutting $2 billion out of the president's proposed $421 billion defense budget request. Some GOP colleagues howled that such a move would undermine the commander in chief during a time of war. When he met with Vice President Dick Cheney to discuss the budget, Nussle says, "the vice president said that he, of course, would be advocating for the president's position." And last week, just before his committee began consideration of his proposal, Nussle was forced to restore his proposed cuts. Senate Budget Chairman Don Nickles had called for an even larger reduction of $7 billion; he, too, had to back off.
But the growing deficit is a bone in the throat of the GOP. "We have got to get back to the idea that our party is the party of fiscal discipline," says Rep. Ray LaHood, an Illinois Republican and one of the stalwarts of the 1994 GOP revolution that was premised on reducing the deficit and shrinking government. LaHood believes Nussle is just the man to achieve that in these difficult times. "He's better than anyone in our conference on this, because he believes in it," LaHood says.
Nussle puts the blame for the deficits squarely at the feet of a pre-Bush recession and the costs of fighting a war on terrorism--not on the administration's trillion-dollar tax cuts passed in 2001 and 2003. He says he takes some comfort in knowing what to do about the problem, because he has seen deficits before.
"It's ironic on one hand but fortunate on the other hand, because we know the recipe of what worked before. We have been in this situation before," he says, referring to the deficits of the early 1990s. Much of that budget balancing, however, was achieved by rampaging economic growth and Clinton-era tax hikes, which Nussle and the president reject. "Look, we've had budgets around here that were balanced, but those budgets did not make America safer, and they did not create one job."
Nussle's $2.4 trillion budget for the next fiscal year calls for $819 billion in discretionary spending, plus a set-aside of $50 billion to fund the nation's war operation in Iraq (funding the Bush administration has yet to request).
"We know it's not going to be zero," says Nussle. His budget proposal seeks to protect $137 billion in tax cuts over five years for items such as a marriage penalty rollback, increases in the child tax credit, and expanding the new 10 percent income tax bracket. He is also seeking to slash about $13 billion from programs such as Medicaid and farm subsidies.
Before leaving town for a weeklong recess, the Senate approved a $2.36 trillion budget that pares back some of the president's spending and slows his tax cuts. The 51-to-45 vote kept intact much of the president's proposals on defense and tightened domestic spending. But it ignores his call for the tax cuts passed in 2001 and 2003 to be made permanent.
In his Capitol Hill office on the third floor of the Cannon Building, Nussle has a bust of Abraham Lincoln on a side table; there's a reproduction of Grant Wood's American Gothic on the wall above it. Wood was born in a little town in Jones County in Nussle's eastern Iowa district. And in Nussle's approach to the deficit, there is something of the stoic implacability universally associated with that famous painting.
"We have to start that long journey with a first step," he said in unveiling his budget. Nussle has no illusions about what lies ahead, or how intimately interested everyone is in his budget. Lawmakers, with their own pet projects in mind, do not defer to the budget chairman in the same way they do to other chairmen. "My budget has to be a consensus of the entire family's concerns," he says, referring to the GOP votes he needs to pass it. "Unlike other committee chairmen, I don't get to introduce my bill and pass it. I don't get to be king for a day." But fortunes can change, and maybe there is a paper-bag crown somewhere in his future.
Born: June 27, 1960, Des Moines, Iowa
Family: Married, wife Karen, a lobbyist; two children, Sarah, 15, and Mark, 13, from previous marriage. Lives in Manchester, Iowa
Education: Luther College, B.A. 1983; Drake Univ., J.D. 1985
Public service: Delaware County, Iowa, attorney, 1986-1990
Public service: U.S. House of Representatives, 1991 to present. First District of Iowa
Public service: Chairman of House Budget Committee, 2001 to present
This story appears in the March 22, 2004 print edition of U.S. News & World Report.