May 06, 2003

Kevin Drum Needs to Be Told What to Think

Kevin Drum needs to be told what to think about Mitch Daniels's resignation from the post of Director of the Office of Management and Budget. I will oblige. These are the party-line talking points:

  1. The principal task of the Director of the Office of Management and Budget is to tell people "no": he or she needs to tell agencies "no" when they want to expand their programs beyond reason; he or she needs to tell White House political operatives "no" when they want to offer tax cuts beyond reason.
  2. A successful OMB Director makes current and projected future federal budget deficits shrink (or current and projected future surpluses expand).
  3. Given what has happened to the current and projected future federal budget balances under his tenure, Mitch Daniels may well be the least successful OMB Director in American history. (He may be the second least successful--David Stockman may beat him out for the "worst" title: it's a matter of opinion.
  4. You may argue that Mitch Daniels faced a uniquely bad situation when he became OMB Director: a president too lazy to grasp the issues, a senior White House staff that did not understand that, like, bad, like, economic policy could, like, create bad economic news when, like, it comes time to try to reelect the president. And you can argue that this uniquely bad situation means that some points should be added to his score as a handicap when evaluating his tenure.
  5. But if an OMB Director does find himself losing every single battle for budget rationality, he or she has a duty to sound the alarm: send up a flare gun: give an interview with an Atlantic Monthly reporter saying that "nobody understands these numbers: resign on principal. But Mitch Daniels did none of these things.
  6. The natural conclusion to draw is that he funked it: failed to do his job because he knew that if he did his job as OMB Director properly, he would make powerful enemies among the White House political operation, and would be foreclosed from making a run for the Indiana governorship.
  7. Cue quote from A Man for All Seasons: "That's an interesting chain you are wearing. May I see it?" "His Majesty has graciously made me Justiciar of Wales." "Ah, Richard, it is written: 'How doth it profit a man to give up his soul for the whole world?' But for Wales?"

Indiana may be better than Wales: it is certainly flatter, and the names of the towns have vowels in them. But the same principle applies.


CalPundit: Budget Chief: I'd Rather Be Governor....Of Indiana: BUDGET CHIEF: I'D RATHER BE GOVERNOR....OF INDIANA....CNN reported two hours ago that White House budget director Mitch Daniels has resigned. Two hours ago! But econo-bloggers Brad DeLong, Max Sawicky, and Megan McArdle all remain silent. What am I supposed to make of this development until they tell me what to think?

Posted by DeLong at May 6, 2003 01:19 PM | TrackBack

Comments

In fairness, there's a fourth option: the WMD is there but we haven't found it yet. That still has some pretty negative implications for our intelligence agencies, but I think it would be less bad than the other three possibilities.

Posted by: Kevin Drum on May 6, 2003 01:29 PM

Mitch Daniels of OMB reminds me of David Duncan - Andersen's audit partner for Enron with 2 exceptions. Daniels was both more dishonest and quicker to get out of town before the real auditors took over.

Posted by: Hal McClure on May 6, 2003 01:35 PM

Mitch Daniels of OMB reminds me of David Duncan - Andersen's audit partner for Enron with 2 exceptions. Daniels was both more dishonest and quicker to get out of town before the real auditors took over.

Posted by: Hal McClure on May 6, 2003 01:38 PM

Back home in Indiana, we have no idea how Daniels would do as governor. Indiana is a no tax no service state so Daniels would not have to tell the legislature not to ask for new programs. If elected Daniels would have to deal with a disfunctional no new taxes legislature in a state that does not raise enough revenue to cover expenses.

Daniels does have ties to Pharmaceutical mfg Eli Lilly and they are a progressive force in the state. The hope would be that a GOP governor could break the gridlock of a GOP legilature that has blocked most of the progressive legislation for the past decade.

Daniels does not have an easy road. Unions are still strong in Indiana and have been in a bitter battle with GOP legislature over prevailing wage issues. The unions are likely to strongly oppose ANY GOP nominee for governor. What is less clear is who will run on the Democratic ticket. The current gov is retiring and his Lt gov is not running. No Democrat with statewide recognition is running. However, Daniels has the same problem. Most Hoosiers are clueless about OMB and suspicious of a guy whose last job was in Washington.

All bets are off on this race, but Bush might come to Indiana to campaign for Mitch.

Posted by: bakho on May 6, 2003 01:49 PM

"2. A successful OMB Director makes current and projected future federal budget deficits shrink (or current and projected future surpluses expand). "

This may be the goal of most rational OMB directors, however, this was never a stated goal of the Bush administration. The stated goal of the Bush administration was that the Federal revenue was in surplus and that Mr. Bush would return those tax dollars to the tax payers.

The goal of the Bush administration was to reduce the surplus, indeed to eliminate as much of it as possible without going into deficit. So from that perspective, Daniels did that job well other than overshooting the mark due to the trifecta of recession, terrorist attack and war.

I think the resignation of Daniels at this time to run for IN gov. is legit. If he wants to run he has to get in now before he picks up primary opposition with momentum.

The GOP would like to reclaim Dan Quayle's Senate seat and that would be made easier by a GOP governor. However, Bayh has a popularity in the state (and near 100% union support) that makes challenging him difficult if not impossible for the GOP. This likely has the complete blessing of Karl Rove.

Posted by: bakho on May 6, 2003 02:20 PM

Recession, war, and terrorist attack are irrelevant to the projected budget deficit after 2010. Don't get fooled by their talking points.


Brad DeLong

Posted by: Brad DeLong on May 6, 2003 02:24 PM

While we are at it, let's blame Mitch Daniels for the dot com bust, Enron, Worldcom, 9/11, the recession, and any other bad stuff we can come up with. And the reduction in the federal revenue baseline since the late '90s has a huge amount to do with the deterioration in the budget forecast now and past 2010. I guess it makes people feel better to pretend the happy days of budget surpluses and stock market bubble fantasies would still be here if Al Gore was President and one of his trusty sidekicks was the OMB director.

Posted by: Joe Blog on May 6, 2003 02:34 PM

>>This may be the goal of most rational OMB directors, however, this was never a stated goal of the Bush administration.<<

Bill Clinton campaigned on how important it was to have a middle-class tax cut. George H.W. Bush campaigned on how important it was to avoid tax increases. Ronald Reagan campaigned on how important it was to cut taxes. Jimmy Carter during his campaign said the economy needed a big stimulus package. Richard Nixon attacked Johnson's Vietnam War income tax surcharge. John F. Kennedy talked about the importance of getting the economy moving again.

I cannot think of a candidate for president (save Ross Perot) who thought during the campaign or before taking office that controlling the deficit would be Job #1 or even Job #5. The difference between this administration and the previous one is that the people arguing for fiscal reponsibility decisively lost the internal struggle for power and influence in 2001, while their analogues decisively won the struggle for power and influence in 1993.

Posted by: Brad DeLong on May 6, 2003 02:47 PM

Well, of those things you list, Mitch Daniels is partially responsible as a member of this administration for continuing policies that don't fight this recession. Long term growth plans are useless in the long run when people are going to be hurting in the short term. What's that Keynes' quote that Krugman is so fond of, "But this long run is a misleading guide to current affairs. In the long run we are all dead." If Al Gore was President and one of his trusty sidekicks was OMB director, you can be damn sure that they'd be doing something to help fight recession and unemployment in the short term.

Posted by: Trickster Paean on May 6, 2003 02:59 PM

Trickster Paean,

Fair enough. This administration should be held to account for their economic policies and I agree that they are not well focused on current economic challenges. The part that bothered me is villifying a guy for being the OMB director during a period of time where the budget forecast was going to go to hell no matter who held the post.

Posted by: Joe Blog on May 6, 2003 03:42 PM

A successful OMB Director makes current and projected future federal budget deficits shrink (or current and projected future surpluses expand).

Well, I guess Mitch Daniels gets one point then. He has made projected future federal budget deficits shrink. Probably not in the sense you were intending though...

Posted by: Nick on May 6, 2003 05:05 PM

>>And the reduction in the federal revenue baseline since the late '90s has a huge amount to do with the deterioration in the budget forecast now and past 2010.<<

A quarter. 3/4 is "policy," at least when I run the numbers...

Brad DeLong

Posted by: delong@econ.berkeley.edu on May 6, 2003 05:17 PM

The Bush administration has been very successful in confusing people about the nature of the deficit. In the short term, the economic downturn contributes greatly to the fiscal deficits (much of the tax cuts have not yet come into being) however, you are correct that the long term deficit through 2010 is a function of the tax cuts. The surplus in 2011 is due to the tax cut expiration, and those numbers are used to make the long term picture rosier than it is. Does anyone believe that Congress will sit on its hands and automatically let the top rate go back to 39% in 2011 or the estate tax be reinstated?

Posted by: bakho on May 6, 2003 09:01 PM

Reagan had Congressman David Stockman at OMB. Clinton had Congresman Leon Pinetta (sp) at OMB. W Bush has this industry lobbyist Daniels guy that has never been through a Congressional budget fight. If the president picks a yes man for head of OMB, then he gets what he gets.

Posted by: bakho on May 6, 2003 09:08 PM

"Y" and "W" are vowels in Welsh, you bloody Saxon.

Posted by: dsquared on May 6, 2003 11:00 PM

I'll grant you "y", but "w"? Never!

Posted by: Brwd DwLwng on May 7, 2003 06:22 AM

Maybe there is another reason for the Daniels resignation, legal problems.

http://www.indystar.com/print/articles/4/041129-6234-092.html

Maybe the administration does not want to rekindle all the insider trading stories of 2002 (Harken oil, etc.). Maybe Daniels will not be running for IN governor after all.

Posted by: bakho on May 7, 2003 08:36 AM

Saxon? wouldn't the "de" in Delong imply Norman ancestry?

Posted by: FDL on May 7, 2003 09:24 AM

bakho,

While you were filling Brad in about Indiana, thank you for not telling him about all the hills. They are a secret among Hoosiers. Brad's not 'posed to know.

bakho makes a fine point about the stuff the next governor will have to attend to. Fiscal policy is not the only issue for a governor, though it has been a thorny one for most governors lately. (Maybe fiscal policy expertise is Daniels' campaign ace in the hole ... but then maybe not.)

By the way, Daniels will more or less have to run as coming from Indianapolis. To my knowledge, nobody from Indianapolis has ever won the governorship. For the same reason that we hick Hoosiers (from outside Marion and adjoining counties) won't elect a slicker from Indianapolis, I wonder how we'd respond to support from Washington for an Indianapolis candidate.

Cards on the table ... I have a distant cousin running for the job.

Posted by: K Harris on May 7, 2003 10:04 AM

>>Saxon? wouldn't the "de" in Delong imply Norman ancestry?<<

There are a few Normans (de Ridgways and others who took part in the Norman conquest of Ireland after England was pacified), a few Irish, and a Scot or two. There are also a bunch of Saxons (including Earl Leofric and his wife, the Lady Godiva--author of the most extraordinary movement for supply-side tax cuts in history), but the de Long trace is actually Huguenot--expelled from France with their property confiscated as a result of the 1683 Revocation of the Edict of Nantes.

I'm still waiting for my reparations check to arrive from Paris.

It's strange: I have ancestors who were on the losing side of the St. Bartholomew's Day Massacre. I have other ancestors who were on the losing side of the Battle of the Boyne.

Posted by: Brad DeLong on May 7, 2003 10:07 AM

Don't know enough about the OMB to comment on that. But the word "cwm" is Welsh for valley, I believe - pronounced "coom". And "rydw" ("ruddoo") is part of the verb "to be". My Welsh stops round about there, but I think that's enough evidence to be going on with. They might not be your English-speaking vowels, Mr D, but they're vowels nonetheless.

Posted by: JeremySJ on May 7, 2003 10:08 AM

Don't know enough about the OMB to comment on that. But the word "cwm" is Welsh for valley, I believe - pronounced "coom". And "rydw" ("ruddoo") is part of the verb "to be". My Welsh stops round about there, but I think that's enough evidence to be going on with. They might not be your English-speaking vowels, Mr D, but they're vowels nonetheless.

Posted by: JeremySJ on May 7, 2003 10:09 AM

Don't know enough about the OMB to comment on that. But the word "cwm" is Welsh for valley, I believe - pronounced "coom". And "rydw" ("ruddoo") is part of the verb "to be". My Welsh stops round about there, but I think that's enough evidence to be going on with. They might not be your English-speaking vowels, Mr D, but they're vowels nonetheless.

Posted by: JeremySJ on May 7, 2003 10:14 AM

Sorry about that accidental triple posting there. Brad's server's a little slow today, and the BBC's network is pretty bad too...

Posted by: JeremySJ on May 7, 2003 10:23 AM

Typo alert: "principle" not "principal"
Wry aside: as perhaps the only person in the US with a MA in Middle Welsh & Latin I was going to assure you that Welsh has plenty of vowels, they just inexplicably hide them as Y's & W's, but I see that point has already been made. Welsh is way cool, consider the fact that you have to talk about consonants 'mutating' on day one ('p' can become 'b', 'ph', even 'mh' depending on its grammatical position). And don't even ask about the LL, you don't want to know. And if you want your mind to implode pick up a grammar of Irish (early-modern or earlier), about 65% of the letters are just there to tell you how to pronounce the remaining 35%.
Bonus: my mother's family is from Indiana, and I went to High School there for two years. Talk about serendipity

Posted by: Bruce Webb on May 7, 2003 10:57 AM

The Chair of Classics at Columbia University, Gareth Williams, speaks fluent Welsh. It's just one of those things.

Posted by: John Isbell on May 7, 2003 01:09 PM

In Welsh "y" sounds like "ee" in "feet" when it's in the last syllable of a word, and in any other syllable of a word it sounds like the German "ö" or "oe", or simply like a schwa (unaccented vowel) in unaccented syllables. If the word has only one syllable, it can be either; there are a lot of short grammatical words like "yr" and "yn" that just sound like "er" and "un". "cyllyll" (knives) is pronounced sort of like "kuthl-eethl".

"w" always sounds like "oo" in "tool".

"u" and "i" both sound like you'd expect "i" to sound - short as in "pit", or long as in "feet". Yes, "u" and "i" are the same vowel, except in the North of Wales where "u" is more rounded.

So the Welsh word for Wales, "Cymru", we would transcribe as "Kumry" or "Kurmry".

I'm not sure how to pronounce "Llanfairpwllgwyngyllgogerychwyrndrobwllllantisiliogogogoch", though.

Posted by: Xhenxhefil on May 7, 2003 10:24 PM

Daniels is the last of Bush's original economic team (installed only two years ago) to leave. Bush is also the first President since Hoover to preside over a net loss of jobs throughout his term.

There is, I am certain, a connection between those two facts.

Posted by: Richard Brewer on May 8, 2003 03:07 AM

Daniels is the last of Bush's original economic team (installed only two years ago) to leave. Bush is also the first President since Hoover to preside over a net loss of jobs throughout his term.

There is, I am certain, a connection between those two facts.

Posted by: Richard Brewer on May 8, 2003 03:07 AM

I love the post except I must point out that the food is better in Wales.

K. Harris, you are right about the Indy thing. Its a liability especially coupled with coming from Washington. [I think Joe Andrews has this problem also. He just reeks of big Indy law firm] Daniels spoke at a GOP fund raiser in Zionsville in which he pretty much stated his strategy for election would be targeting the suburban counties. As this leaves the North, the South & Indy. I think he would be a few votes shy of electibility esp if the dem nominee would be smart enough to use Julia Carson's GOTV team in Marion County. Bart Peterson has some slick people also.

Bakho; you notice that the Star reported on the subpeona, but then neglected to mention it in its glowing editorial of praise & endorsement. It will be interesting to see what pressure is put to bare on Murry Clark to stop raising cash & withdraw.

Posted by: Hoosiercat on May 8, 2003 07:42 AM

Nothing much to add except the word 'cwm', which comes from Welch and is way cool to use at Scrabble.

"A, E, I, O, U, and sometimes Y . . . and W"

"No it isn't"

"Uh huh. Why do you think it is called 'double U?'

Posted by: Tripp on May 8, 2003 08:06 AM

A lot depends on who the Dems nominate. I am thinking that in the wake of IPALCO, that Daniels will not even survive the primary. I hope another progressive will rise within the GOP. The GOP needs to break with its no new taxes wing and nominate a progressive.

K. Harris is correct. Indiana is not flat like Illinois except where the prarie extends into the NW corner. However, IN is as Brad says flatter than Wales. Floyd's Knobs doesn't inspire images of magestic hills and the truly awesome sand dunes along Lake Michigan don't have names.

Posted by: bakho on May 8, 2003 10:39 AM
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