Senate Budget Committee chair Kent Conrad (D-ND) issued an unorthodox statement yesterday regarding the expected nomination of Jim Nussle to succeed Rob Portman as OMB Director:

Representative Nussle and I had a very frank discussion today. While I understand the President's desire to appoint an OMB Director of his choice, a number of Members have spoken with me about their very real concerns about his nomination. Members expressed serious reservations about Mr. Nussle's reputation for confrontation.

Our nation faces serious long-term fiscal challenges that can only be addressed with bipartisan cooperation. We need an OMB Director who is fully committed to working with Congress to tackle all of the fiscal challenges facing this country.

Conrad went on to say that Nussle's nomination was in "some difficulty," and held off on committing to a hearing on Nussle's nomination. If the Budget Committee does not hold such a hearing, the nomination will die.

Count this the opening salvo launched in the Nussle nomination "proxy fight" over the FY 2008 budget predicted by some observers.

The Washington Post is running a multi-part series on Vice President Dick Cheney and his impact on federal policies. Today, the series' authors, Jo Becker and Barton Gellman, examine the veep's role in influencing domestic policy. This section about the budget-making process is enlightening:

The vice president chairs a budget review board, a panel the Bush administration created to set spending priorities and serve as arbiter when Cabinet members appeal decisions by White House budget officials. The White House has portrayed the board as a device to keep Bush from wasting time on petty disagreements, but previous administrations have seldom seen Cabinet-level disputes in that light. Cheney's leadership of the panel gives him direct and indirect power over the federal budget -- and over those who must live within it.

Mitchell E. Daniels Jr., who served as Bush's budget director from 2001 to 2003 and is now governor of Indiana, said that during his tenure the number of times a Cabinet official made a direct budget appeal to Bush "was zero," which aides from previous administrations found "stunning," he added.

Daniels said he chalked that track record up to "the respect people had for the vice president." Cabinet members, he said, recognized that if the board didn't agree with them, "then the president wasn't likely to, either."

For the last several weeks, the Bush administration has issued a series of veto threats and importunings to Congress regarding "irresponsible and excessive" levels of spending in FY 2008 appropriations bills. Some observers have wondered how seriously to take the administration's rhetoric, in view of what some see as back-tracking on or inconsistency between these statements. What follows is an analytic framework explaining what at first blush may seem like a shifting veto strategy, that is to say, an incoherent strategy or no strategy at all.

The administration's opening salvo was announced on May 11, in a letter from OMB Director Rob Portman to House Budget chair John Spratt (D-SC):

I will recommend the President veto any appropriations bill that exceeds his request until Congress demonstrates a sustainable path that keeps discretionary spending within the President's topline of $933 billion and ensures that the Department of Defense has the resources necessary to accomplish its mission.

Five days later, after Congress had adopted a FY 2008 Budget Resolution providing $955 billion in discretionary spending, Portman issued a press release stating: "I will recommend the President veto appropriations bills that exceed our request for discretionary spending." This month, the administration has issued Statements of Administration Policy regarding three appropriations bills, with the following operative veto language:

• H.R. 2638, Homeland Security Appropriations Act [June 12] -- "H.R. 2638 exceeds the President's requests for programs funded in this bill by $2.1 billion, part of the $22 billion increase above the President's request for FY 2008 appropriations. The Administration has asked that Congress demonstrate a path to live within the President's topline and cover the excess spending in this bill through reductions elsewhere. Because Congress has failed to demonstrate such a path, if H.R. 2638 were presented to the President, he would veto the bill."
• H.R. 2641 — Energy and Water Development Appropriations Act [June 13] -- "H.R. 2641 exceeds the President's requests for programs funded in this bill by $1.1 billion, part of the $22 billion increase above the President's request for FY 2008 appropriations. The Administration asked that Congress demonstrate a path to live within the President's topline and cover the excess spending in this bill through reductions elsewhere. Because Congress has failed to demonstrate such a path, if H.R. 2641 were presented to the President, he would veto the bill."
• H.R. 2642 — Military Construction and Veterans Affairs Appropriations Act [June 13] -- If Congress determines that additional resources above the President's request and enacted supplemental funding are necessary, Congress must provide reductions in other appropriations bills to offset this increase and meet the President's topline of $933 billion. If Congress increases VA funding above the President's request and does not offset this increase with spending reductions in other bills, the President will veto any of the other bills that exceed his request until Congress demonstrates a path to reach the President's topline of $933 billion."

These statements bear careful reading. Ignore wire service stories and commentariat interpretations that fail to quote these passages in full. To see how they are consistent with the $933 billion "topline" figure and mutually reinforcing, it is helpful to consider the aggregate margin for error that the Congressional 302(b) allocations afford the president. The four instances where Bush has requested more money than Congress' allocations total $5.3 billion. That's the maximum amount of additional spending over and above his requests that "demonstrate a path to live within the President's topline," without requiring aggregate offsets.

Bush has announced that he will not veto only one spending bill thus far, MilCon-VA, where Congress has exceeded his request by $4 billion -- an amount within his margin for error and, therefore, not foreclosing a path toward his $933 billion topline.

If the "Aggregate Topline" theory has predictive value -- assuming the president ends up signing the MilCon-VA bill and Congress' other bills similarly track its 302(b) allocations-- he will be compelled to veto the following bills:

• Labor-HHS-Education ($10 bn. over his request)
• Homeland Security ($3 bn. over)
• Commerce-Justice-Science ($2 bn. over)
• Interior-Environment ($2 bn. over)
• Transportation-HUD ($2 bn. over)

With the Bush administration trying to effect a sudden shift from spendthrift to scrooge this budget season, the time is right to sort out fiscal myth from reality.

The administration has issued shrill warnings that "the Democrats' budget would lead to spending and tax increases that put economic growth and a balanced budget at risk" (per OMB, June 12). In fact, the administration has demanded an increase in FY 2008 discretionary spending of seven percent over FY 2007; by contrast, the Democrats' proposed increase is a whopping nine percent, as we noted last week.

To set the record straight, the Center on Budget issued a paper yesterday entitled "The Fight over Appropriations: Myths and Reality." While the GOP has warned loudly that the Democrats' budget is a stalking horse for "the largest tax increase in American history," the paper presents as one of its key findings:

Under the funding levels that Congress plans, domestic discretionary programs would grow more slowly than revenues, and thus would not create pressure for tax increases.

The entire paper is a welcome dose of reality to counter the hysterical rhetoric of GOP leaders regarding the budget.

Here are the answers to this morning's pop quiz on who said what about yesterday's news of the changing of the guard at OMB:

• "I regret Budget Director Portman is resigning." -- Sen. Kent Conrad (D-ND)
• "It's an act of absolute confrontation." -- Rep. David Obey (D-WI)
• "It's good for my mental health." -- A member of the Bush cabinet (Portman himself)
• "My immediate reaction is not one I'm wise to articulate." -- Rep. Steny Hoyer (D-MD)

In a succinct synopsis of President's Bush sudden switch from spendthrift to scrooge, Stan Collender asks in his latest Budget Battle column ($) why Bush has declared a(nother) unwinnable war.

It's unclear why the White House would issue five veto threats just in the last two weeks of budget bills fractionally larger than his requests when the six-year

Bush record on the budget is dismal. He has added trillions of dollars in debt and approved increased spending... His budget directors are little-known and have no credibility with the general pubic or financial markets. His Treasury secretaries have been practically irrelevant in making domestic economic policy. The president's credibility on the budget is virtually nonexistent.

Bush even devoted last Saturday's national radio address to blaming Democrats in Congress for the growth in earmarks "even though the increase occurred when the House and Senate were under Republican control and in appropriations that he signed... It's hard to imagine what the White House is thinking."

But Collender tacitly suggests an answer to his own question in his first sentence, noting the paradox of focusing on the budget "even though immigration and the Middle East [are] on the minds of more people."

Precisely. What better way to get people's minds off these sandtraps than to baffle them with budget baloney?

A 29 percent approval rating is the mother of invention.

So Jim Nussle will be taking over at OMB in August. Congressional Democrats have already begun to romanticize their relationship with current OMB director Rob Portman, probably a sign that they aren't looking forward to working with Nussle.

"I very much regret [the departure]," said Senate Budget Committee Chairman Kent Conrad (D-N.D.), who has sparred with Portman over budgetary issues. "Rob Portman was someone of credibility and decency, someone I felt I could work with."

Portman may have worked well with Congress behind the scenes. But he drank deeply of the kool aid they serve at the White House, the one that makes you say tax cuts for the wealthy are good for everyone and domestic programs need to be cut or privatized. And so will Nussle, who by all accounts is a party loyalist and fiercely anti-government. The rhetoric from the White House probably won't be changing anytime soon.

More importantly, how will Nussle's appointment affect policy? Ironically, the President may be softening his stance. When Portman announced that he would be stepping down, he both assured that the President's threats to veto appropriations were real, at the same time that he seemed to introduce a rationale for not vetoing bills that exceed Presidential requests. CongressDaily ($):

While Portman said Bush would stand his ground, he did say the president would be flexible on how money is appropriated, as long as the total is within his overall discretionary spending limit.

But that also means early Democratic increases in the veterans spending bill, which Bush appears likely to swallow, will have to be paid for elsewhere.

"We're not going to try to micromanage the process," Portman said. "If Congress can come up with a top line of $933 [billion] -- which is a 6.9 percent increase from 2007, which is triple inflation or more -- then we will be happy to work with them. But until we see a path to the top line, we will be forced to veto many of these bills as they come through the process."

One way to read this is that the President is promising only one veto- the last bill to make it through the appropriations process, which if large enough would bring total discretionary spending over the President's request. But that bill will probably be for the Department of Defense. Would Bush veto it?

Indeed, Nussle's appointment gives the appearance of being tough on government spending. But playing up that appearance may be a way for the White House to back away from actually being tough- the thinking being that if someone as crazy as Nussle carries the message that vetoes won't go out, hardliners wouldn't get as mad.

That could just be wishful thinking- the next few months will show who's for real and who's not.

Match the following four responses to yesterday's news that former Rep. Jim Nussle (R-IA) will replace OMB Director Rob Portman with the four names listed below:

• A. "I regret Budget Director Portman is resigning."
• B. "It's an act of absolute confrontation."
• C. "It's good for my mental health."
• D. "My immediate reaction is not one I'm wise to articulate."

• 1. Rep. David Obey (D-WI)
• 2. A member of the Bush cabinet
• 3. Rep. Steny Hoyer (D-MD)
• 4. Sen. Kent Conrad (D-ND)

Answers will be posted shortly. Clue: winner gets to offer Steny Hoyer some less diplomatic responses.

I'm a little confused. The Wall Street Journal is reporting that Rep. Jeb Hensarling (R-TX) has list of 147 Republican Congresspersons who have pledged to vote to sustain any presidential veto of FY 2008 spending bills.

House Republicans have done an impressive job of ruining their fiscal credibility with voters, and it won't be easy making amends. Today, however, they are taking one step toward redemption when Texan Jeb Hensarling announces that he's gathered signatures from 147 House GOP Members promising to sustain vetoes of any spending bill that exceeds President Bush's budget requests.

I'm really at a loss to explain why Hensarling would wave this list around and make promises about 147 Republicans, because he's going to look awfully silly when Congress overrides any spending bill veto. Either Hensarling will have to eat crow and admit he was full of it, or he will have point to a number of his Republican collegues who failed to make good on their commitments.

And based on this reporting from CongressDaily PM ($) yesterday, it seems that Hensarling is in fact "rounding upwards" the number of veto-sustainers, or the promised sustainers are already showing their, ummm, "flexibility."

OMB Director Portman had previously told reporters even the popular military housing and veterans' funding bill could be subject to a veto threat, as the White House attempts to take a hard line over the $23 billion overall spending increase...But veterans' health is an even more sensitive and emotional issue politically, and GOP aides said Bush would not have the votes to sustain a veto in either chamber.

So, is Hensarling being totally straight with us, or are certain Republican representatives already losing their resolve? There's really only one way to figure this out: Show me that list, Hensarling!

In a press release yesterday, House Appropriations chair Rep. David Obey (D-WI) set forth opening arguments in his usual direct terms regarding the unfolding Executive-Legislative FY 2008 budget debate.

Obey's comments come against the backdrop of the president's repeated threats to veto any spending bill larger than what the White House requested.

The additional funding provided under the budget resolution reflects a change from the President's priorities of ... 2.2 percent change in the discretionary budget. That 2.2 percent is the difference between an Executive Branch headed by a President that needs to work with an independent Congress, and a King who does not. The discretionary budget is the "non-autopilot" portion of the budget. The very title - DISCRETIONARY - indicates it is the thinking portion of the budget. We are supposed to use our judgment to decide funding levels. ...

We do not intend to impose our budget priorities on the Administration, but our votes will not be tied to OMB computer runs. They will be the votes of an independent Congress trying to recognize legitimate policy priorities.

About a year ago, we reported on the administration's opposition to continued funding of the Survey of Income and Program Participation, or "SIPP." SIPP, you may recall is an ongoing program that ""collect[s] source and amount of income, labor force information, program participation and eligibility data, and general demographic characteristics to measure the effectiveness of existing federal, state, and local programs." It is an indispensable source of data for researchers and policy makers that allows them to asses the effectiveness of government assistance programs.

Yesterday, the administration flip-flopped reversed its stance of the program, and dropped its opposition. There's one tiny catch - Bush has not revised his 2008 budget to include funding for the program, and OMB Director Rob Portman has stated that he would advise the president to veto spending bills that exceed the president's request. The absence of a line item in the president's budget for SIPP could cause its demise.

From a statement by Heather Boushey, Senior Economist, Center for Economic and Policy Research:

The Census Bureau has recently indicated that, without additional funding, it will start a new SIPP panel with only half of the standard number of respondents. This is unacceptable. Interviewing only half as many people would severely limit researchers' ability to examine particular government programs, sub-populations and state-level data. Many government programs, such as Temporary Assistance for Needy Families or child care subsidies, affect only small shares of the U.S. population, so a smaller sample would not provide enough data to properly assess these programs. It would also make it difficult, if not impossible, to assess demographic trends at the state level (such as wealth, childcare usage, etc.), even for larger states like North Carolina or Washington.