Cash Clash

National Journal.
The Bush administration is pushing hard for flexibility in spending appropriated funds. Congress is pushing back.

M

any members of Congress carry around copies of the Constitution just in case they need to quote from it. In fact, some special interest groups have produced handy pocket copies for members that make it even more convenient to find the Constitution when they need it.

Members of the House and Senate Appropriations committees have a favorite section-the one that makes them among the most powerful folks in Washington. Article 1, Section 9, Clause 7 reads: "No Money shall be drawn from the Treasury but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time."

While the language may seem straightforward, that section of the Constitution has provoked a long and bitter fight between the Bush administration and key members of Congress. Appropriators claim the administration is demanding more flexibility in deciding how to spend money than the Constitution allows and is providing less information than Congress needs to make spending decisions. The administration responds that it is simply trying to streamline the spending process and better respond to emergencies. The fight has dragged on for two years, shows no signs of ending and carries huge stakes for both branches of government.

The bitterness occasionally has spilled over in public. Consider this March 14, 2002, exchange between Wisconsin's David Obey, ranking member of the House Appropriations Committee and Office of Management and Budget Director Mitch Daniels.

"This is a little book," Obey said, waving around his copy of the Constitution. "It's not very impressive when you look at it, but it happens to run the show. . . . Can you tell me where in the Constitution does it state that the Congress is a branch of government which is inferior to the executive?" Daniels, of course, replied that Congress is not an inferior branch. But Obey was not satisfied. "Now this Congress has an obligation," he told Daniels. "No information, no money."

Daniels attempted to justify the flexibility in using appropriated funds the administration was requesting, saying it is unfortunate when "one of our departments cannot close a regional office or reassign even a handful of people without some sort of firestorm or legislative authority." He attempted to reassure appropriators, saying, "We don't seek unlimited license." But the lawmakers seemed extremely dubious. And the battle continued.

Fights between the two branches over federal spending are hardly new. "All administrations want more flexibility than Congress-and particularly the appropriators-want to give," says Robert Reischauer, president of the Urban League and former director of the Congressional Budget Office. But the Bush administration has taken the demand to new heights, congressional aides charge. "They request more flexibility in anythree-month time period than any administration has requested in its full term in office," says Scott Lilly, Democratic staff director of the House Appropriations Committee. "It's simply breathtaking."

But Sen. John Sununu, R-N.H., an administration ally and a former member of the House Budget Committee, has a different perspective. "It's the age-old tug of war," he says. "You can find examples in every congressional session. It's nothing new. Perhaps what's new is that the administration is pushing back and not backing down." And, he added, "There is nothing unconstitutional in giving some discretion to the administration."

Administration officials argue that they are simply attempting to build on successful experiments at all levels of government in allowing agencies flexibility in spending federal funds. "It's just an approach that has worked," says OMB spokesman Trent Duffy.

NO 'SLUSH FUNDS'

The anger over the flexibility issue is particularly intense in the Bush administration because of the strained relationship between the Office of Management and Budget and congressional appropriators. Daniels was bluntly critical of the congressional spenders during his tenure, once going so far as to say that appropriators do not believe they have a purpose unless they are spending money.

This latest dispute has played out over two years. In its fiscal 2003 budget, the administration requested that appropriations for the Executive Office of the President be lumped into one fund and the administration be given wide latitude in deciding how the money should be spent. OMB argued that within the Executive Office of the President, there are 20 accounts for 11 offices. "The president cannot move even $100 between the Council of Economic Advisors and the Council on Environmental Quality," the administration said in its budget request. The ability to do so would enable the White House to "eliminate redundant staff and improve managerial efficiency," the budget request said.

Congress, however, refused to authorize a shared account. The administration repeated its request for flexibility in its fiscal 2004 budget, and also requested authority to transfer up to 10 percent of the funds in several other accounts. "This initiative provides enhanced flexibility in allocating resources and staff in support of the president and vice president, and permits more rapid response to changing national needs and priorities," the administration argued.

The administration also asked for authority for the Homeland Security Department to transfer up to 5 percent of its money without congressional approval. Congress has given Homeland Security limited authority to transfer funds from agencies that existed before it was created to organizations formed when the department was launched.

Then there was the recently passed fiscal 2003 supplemental spending bill for the war in Iraq and homeland security. Even before the supplemental was released, Congress and the administration clashed because the Pentagon did not send Congress an estimate of how much the war would cost. Such an estimate couldn't be made until the Pentagon figured out when and how to strike, Bush administration officials said. "The people have a right to know," Senate Appropriations Committee ranking Democrat Robert Byrd of West Virginia replied on the Senate floor on Feb. 26-a full month before the administration sent the supplemental request to Congress. "They are going to suffer the costs. Congress must not accept the answer 'not knowable.' The American people, I say, deserve to know."

On the evening the supplemental finally was released, a senior Defense Department official told reporters that the administration wanted 96 percent of the defense funds to go into an emergency response fund that the administration would control. "The reason you do that is that it gives you the ability to transfer funds from one account to another," the Pentagon official told reporters. "If you lock them into particular accounts, you may be overfunding one account, underfunding another account, and then you can't move the monies around."

On April 7, Defense Secretary Donald Rumsfeld put it this way: "Whatever is put forward by the Congress by way of money will be expended in a way that the president decides [it] should be expended."

The administration also asked for flexibility in managing homeland security funds, arguing it would be impossible to determine in advance where emergencies might occur.

It immediately became clear that the White House would gain little flexibility. "We have an obligation to the Constitution," House Appropriations Chairman C.W. "Bill" Young, R-Fla., said during his committee's markup of the supplemental spending measure. That responsibility, he added, included "the accountability of the people's money." The House bill allocated funds to specific Defense accounts, rather than granting the administration the flexibility it wanted. "We didn't just create huge slush funds for agencies," Young bluntly declared. "We are trying to be supportive of the president, while maintaining our constitutional responsibility."

In the report on the supplemental bill, congressional Republicans said that during the Persian Gulf War, the first President Bush requested wide discretion on how to spend war money. Ultimately, Congress gave the president and Defense Department "some degree of flexibility in dealing with unknown and unpredictable costs, but also ensured that Congress would establish parameters in terms of both appropriations allocations and notification requirements."

The request for flexibility met even more strident opposition in the Senate, where Byrd is particularly protective of Congress's powers. "Count me out when you ask for these additional flexibilities," Byrd told Rumsfeld at a March 27 hearing. "I think Congress will respond to the needs whenever the case is made, but we can't afford to give this administration or any other administration a blank check." Byrd noted that Congress did not give Rumsfeld such power when he served as Defense secretary in the 1970s and said he would not get it this year.

Byrd's prediction proved to be largely accurate. The House-Senate conference report on the supplemental spending bill did not establish a Defense emergency response fund, but instead allocated money to specific accounts and purposes. Congress also refused to give the president authority to use foreign contributions without congressional approval, to allow the Homeland Security Secretary to spend $1.5 billion, to create a $250 million homeland security account for the president, or establish a $500 million counterterrorism account for the attorney general's office.

The bill did create a $16 billion fund for the Defense Department to use to cover combat costs and other expenses, but required the Pentagon to report on any money spent from the fund five days in advance. Democrats immediately argued that the Constitution won over flexibility. "They got more than I'm comfortable with, but they got less than 10 percent of what they asked for," Lilly says. One budget analyst says he was surprised that the administration got as much as it did. "The fact that they got any kind of flexibility was extraordinary because Congress didn't want to give . . . any," says Stan Collender, managing director of the federal budget consulting group at Fleishman-Hillard Inc.

INFORMATION DEFICIT

Aside from the flexibility issue, congressional appropriators also contend that the administration has failed to provide sufficient specific justification for its budget requests. At one point this spring, Homeland Security Appropriations Subcommittee Chairman Harold Rogers, R-Ky., ended a hearing because officials at the Homeland Security Department had not yet provided documents making a case for their budget requests.

"We have no justification for the Bureau of Customs and Border Protection, and that for Immigration and Customs Enforcement was only received on Monday," he said at a March 27 hearing. "If such funding is urgently required, as I believe it is, the details, plans and specifics to back up the request should have been available long ago."

Last year, House Treasury-Postal Appropriations Subcommittee Chairman Ernest Istook, R-Okla., told Daniels the administration needed to be more forthcoming. "I am dissatisfied with the quantity and quality of information coming out of the administration, as it relates to homeland security," Istook said. "This is a major issue. It involves billions of taxpayer dollars; more importantly, it involves millions of lives."

Despite complaints from members of Congress about the lack of specific information about how money will be spent, Congress has approved several large and loosely controlled accounts in recent years. Immediately after the Sept. 11 terrorist attacks, the House and Senate took swift action in passing a $40 billion supplemental spending package for homeland security and New York. Appropriators, wanting to avoid the usual parochial fights over such bills and attempting to respond swiftly to the attacks, granted Bush tremendous authority over how to spend the money. The next year, Congress gave Bush authority to reject $5.1 billion contained in a $29 billion supplemental spending bill. Bush did exactly that.

The flexibility and information issues are related, Collender says. "It's part of an overall attitude toward Congress. It's not just flexibility. They just don't want to deal with Congress at all."

Reischauer says the administration's efforts to win spending flexibility aren't much different than those of previous administrations, just more intense. The executive branch typically argues that flexibility allows it to operate more efficiently, while Congress regards the administration's request as a license to spend money however it wants. The problem is particularly acute at times such as these, when the federal government is shifting priorities and attempting to restrain spending.

OMB's Duffy contends that the administration simply wants the kind of flexibility that has worked at other levels of government. For example, he says, the welfare reform law passed in 1996 provided the nation's governors with wide discretion over how money is spent, resulting in a drop in the welfare rolls. "Flexibility for governors resulted in real success for government," Duffy says. The administration now is requesting that states be given flexibility in Medicaid and housing, proposals that he says would result in "fewer strings, with accountability." The administration simply wants some of that flexibility for itself, he says.

Duffy says the results of the war in Iraq graphically demonstrated the need for flexibility. "The combat lasted less [time] than was budgeted for, but there were other challenges," he says. Congress did grant the administration discretion in how to spend $500 million dealing with Iraqi oil fields. "There were not as many oil fires [as anticipated], but distribution has been more difficult," he says. The flexibility built into the oil-related funds allowed the administration to spend the money in areas where it was needed. "You're going to have unanticipated blessings and curses," he says. "You've got to be prepared for both."

Duffy also says the administration has attempted to be very careful in how it asks for homeland security money to be spent, which may have resulted in slow information being conveyed to Congress. "It's necessary to proceed cautiously so that money is spent wisely," he contended, especially since the homeland security budget is increasing rapidly. He says news organizations have documented areas in which local governments could have spent money better than they did.

In addition, Duffy says, "This is a real-time world. Things happen awfully quickly." He says that is not only true for homeland security, but also for foreign aid, where the federal government must be able to make decisions on assistance outside the regular budget cycle. Decisions are now being made about what may be needed in fiscal 2005-an impossible task, says Duffy.

Nonetheless, budgeters say it is unlikely that the administration will get much more. "In a way, I'm not sure the administration would want it to be different," Reischauer says, adding that if the federal departments got what the administration wants, Congress would have to monitor department operations more closely to ensure that the money was being well spent. "The administration will not win every one of these fights," Sununu says.

Lilly says the White House has already overplayed its hand. "They've reached the point where the more they ask for . . . the less they're going to get," he says. Dyer says the fight does little for the relationship between the executive branch and Congress. "It's bad karma," he concludes.


David Baumann is a staff correspondent at


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