Person of the Week: Mitch Daniels

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n though nobody was mentioning him by name, only Mitch Daniels could have come up with the extra $4.3 billion the White House desperately needed this week. With Democrats smelling blood in the water in the form of a Congressional Budget Office report that the federal government was billions in the red and would have to borrow money from the Social Security surplus — the "lock box" — to break even this year, finding some extra cash was a political necessity.

Enter Daniels, head of the other accounting firm in town, the White House’s own Office of Management and Budget. By changing the way Social Security’s payroll taxes were calculated and moving the Postal Service from its traditional spot on the retirement fund’s ledger, Daniels’ crew came up with a $4.3 billion Social Security surplus surplus. Thanks to this "more accurate accounting," Fleischer was proud to report, the budget would be balanced, and if the lock box got opened it would be the Democrats’ fault, not George W. Bush’s.

Crisis averted; chalk up another for Daniels, who has been doing this sort of thing all year. Bush, in his half-descriptive, half-self-promotional way, has nicknamed his budget chief "the Blade," and from the start Daniels’ mandate was clear: be the sharp, merciless business end of his boss’ conservative desire for smaller government.

That meant cutting enough fat from the budget to make Bush’s $1.3 trillion tax cut an affordable idea, and since Daniels left his family at home in Indianapolis and moved into a one-bedroom Washington apartment whose walls remain bare, he’s been flashing some pretty mean steel. He stared down Tom Daschle’s Senate over $2 billion in extra farm aid. He cut the $40 billion Donald Rumsfeld wanted for the Pentagon in half. And he even sent his own cost-appraisal team to the wreckage of Tropical Storm Allison to kill a Federal Emergency Management Agency request for more disaster relief — for the state of Texas.

Daniels didn’t want to don the green eyeshade — he’s not even an accountant. Though he spent the last 11 years in the fat-loathing business world as an executive with pharmaceutical giant Eli Lilly, Daniels came to Washington to reprise the pitchman’s role he played as Ronald Reagan’s political director selling the 1986 Tax Reform Act.

"To the extent I bring anything … to this job," he told the Wall Street Journal in a profile published Wednesday, "maybe it’s an ability to think about how a product, whether it’s Prozac or a president’s proposal, is marketed." (Early on in the budget wrangle, Daniels even tried to get the OMB phones to play the Rolling Stones’"You Can’t Always Get What You Want" to callers on hold.)

So far, Daniels has been getting plenty of what he wants. Of the 14 spending bills that have passed the House and Senate for fiscal 2001, only three have exceeded the limits of the budget resolution, and discretionary spending growth is set to top out at 6 percent. Not bad work with a Congress coming off the 8-percent pork-fest that was Clinton’s last budget — and with a boss who couldn’t resist making additional spending requests of his own. If the original budget surplus estimate had only held up, there would have been plenty.

To loyal Reaganites, of course, a $1.3 trillion government diet pill was a soft sell. The tax cut was the surplus, and Washington was well rid of all that tempting extra cash. But to keep doomsaying Democrats from overrunning the place in 2002, Bush needs to prove to moderate skeptics that a Republican could cut taxes, build missile defense, boost education and balance a budget that began the year in a $125 billion surplus. But that money has quickly vanished. The tax cut took $78 billion in tax receipts and the idling economy another $40 billion, and Bush and the Democrats spent the rest of the way.

Fiscally speaking, a few billion here or there was no big deal. But for Bush politically, his first budget was going to be a referendum on his election — and like the election, it was so close that every last dollar needed to add up right.

Fortunately, Mitch Daniels knows a good accountant.