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Office of Management and Budget
News Release

October 16, 2001; 7:00 p.m. EDT


In Conference Board Address OMB Director Daniels Says
Emergency Needs Must Supercede Lower Priority Spending

Springtime for-Spenders Threatens Long-Term Surpluses

New York, NY -- In an address before the Conference Board’s annual dinner, Office of Management and Budget Director Mitchell E. Daniels, Jr. today said that while the Bush Administration will ensure that needs related to the attack on America are properly funded, now more than ever discipline must govern the expenditure of taxpayer dollars.

Highlights of Director Daniels’s Speech

Funding Emergency Needs

"I have just returned from the site of the former World Trade Center, where a visitor’s heart is torn yet again by the loss New Yorkers have suffered. It has been clear from the first day that the compassion of Americans would be manifested in a totally unprecedented response."

"Regrettably, the funds the nation wants to devote to assisting victims, protecting our people, and conquering terror are now the target of opportunistic spending sorties masquerading as "emergency" needs. Tree trimming does not qualify as disaster relief, or permanent expansions of government as emergency response."

Springtime for Spenders

"It might be autumn everywhere else, but in Washington it’s springtime for spenders. Overnight, a climate of fiscal restraint has been dispelled. We now face a great risk of runaway spending, the erosion of the long-term surpluses we have been anticipating, and the erection of a much larger permanent federal government."

"This sudden springtime has inspired a flowering of creativity across the federal government, Congress, and the special interest community. The availability of $40 billion in ‘emergency’ appropriations triggered more than $120 billion in helpful suggestions from Cabinet departments. Many of these blossomed from bulbs dormant for years in the bottom drawer of some bureaucracy. Others are hardy perennials that have been offered up time and again by special interest groups. With a little imagination, any straight-faced advocate can recast his pet program somewhere under the inviting headings of war, recession, or disaster recovery."

Economic Stimulus Plan

"The government has acted swiftly to address the twin crises of terrorism and economic downturn. Both are expensive problems, particularly when addressed under pressure and with the need to preserve bipartisan harmony. The President has always listed war and recession as acceptable reasons for deficit spending and we may well see a deficit in FY 2003. But recklessness now could dig a deficit hole from which we would not emerge even after recovery comes."

"While additional stimulus is warranted, it should be limited to between $60 billion and $75 billion; made up mainly of tax relief to balance the billions in spending already enacted; neutral across industries, not sector-specific; and of limited duration. We need to return to surplus as soon as possible and preserve long-term surpluses for debt reduction, Social Security reform, and other major objectives."

Airline Industry Support

"The government has ensured that the airline industry not collapse under the weight of business losses and uninsurability. Although the airline industry’s initial request was cut by 60%, enough cash was provided and liability limited to keep the carriers flying. A window has also been opened for federal loan guarantees to carriers that can demonstrate a strong prospect of success in the changed, probably downsized air transport market of tomorrow."

Treating Causes, Not Symptoms

"Other sector-specific bailouts should be avoided. Industries heavily dependent on air travel will benefit from the recovery of the airlines, and from macroeconomic measures that spur overall growth. Our ministrations must stop at causes, not symptoms. Attempting to rush from sector to sector applying first aid would be an economically futile and fiscally ruinous mistake."

Summary -- Clarity of Mission

"The nation now has two overriding public goals: defeat terrorism and defend the homeland. It also must meet its obligation to repair the damage evil has done. Beyond these imperatives, everything is secondary. Many lesser priorities will have to yield while we ensure that the essential functions of government are provided for. The alternative is to discard discipline totally and imperil our long-term economic health."

Click here for the entire transcript