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An Unlikely Budget Victory for the Guy Congress Loves to Hate

For two years, White House Budget Director Mitch Daniels' war on congressional spending has made him a figure of fear and loathing on Capitol Hill. Senate Appropriations Committee Chairman Robert C. Byrd (D-W.Va.) won't speak to "that big mouth." And the panel's top Republican, Ted Stevens of Alaska, rips Daniels' hard-edged negotiating style as "crazy." So thick is the animosity that the battered budget director, dubbed "The Blade" by the Nicknamer-in-Chief, has taken to calling himself "The Pi?ata."

These days, however, it's the Pi?ata wielding the big stick. With the Iraq war debate consuming Congress in the last days before it adjourns, Daniels is winning his once-quixotic battle against popular domestic spending programs.

Congress won't have time to pass more than a handful of the 13 money bills needed to keep the government operating. Spending for the military will likely increase by $20 billion, but other programs won't fare so well. Lawmakers will be forced to freeze all domestic spending at least through December and perhaps into next year. The upshot: a huge victory for Daniels. "If the alternative is excessive spending," he says, "then we'll take this."

While Daniels' hard line helps burnish George W. Bush's credentials as a foe of Washington's big spenders, the White House may pay a price for keeping funding at fiscal 2002 levels. For example, efforts to finance an ambitious homeland security agenda and combat terrorism could be hampered. Daniels insists there will be no shortfall, but agencies such as the new Transportation Security Administration may face a hiring freeze or layoffs of sky marshals and checkpoint screeners.

GOP political operatives have an even bigger worry: The clampdown could hurt Republicans in key congressional races by eliminating the projects that get candidates elected. "This may be helping the President," moans one Hill GOP aide. "But it ain't helping us."

One worried Republican: South Dakota Senate candidate John R. Thune. Federal aid for drought-stricken farmers and ranchers is a key to the tight Senate race between Thune and Democratic incumbent Tim Johnson, who backs at least $5 billion in additional assistance. That has left Representative Thune on the defensive since August, when Bush--during a campaign appearance on his behalf--opposed extra money for agriculture relief. Although the White House now promises about $752 million in new assistance, a spending freeze would bar any more aid.

In Colorado, Democrat Tom Strickland blames incumbent GOP Senator Wayne Allard for the state's declining share of federal aid. One flash point: help with the nearly $200 million it cost to fight wildfires this summer. Allard and other Western lawmakers want to add such aid to an upcoming money bill. While the budget impasse continues, however, the cash will never leave Washington--and Allard may appear as ineffective as Strickland claims he is.

Also squeezed: Representative Constance A. Morella (R-Md.). She has survived eight terms in a Democratic district chock-full of government employees by taking care of constituents. But budget gridlock would shrink a proposed federal pay raise and freeze new funding for the National Institutes of Health, a big employer in her district.

The deadlock could be broken after a new Congress is elected in November. So far, though, with an unlikely assist from Saddam Hussein, Daniels has put domestic spending on a low-fat diet. The question is: Will it threaten the GOP's short-term political health? The Food & Drug Administration, leaderless since President Bush took office, is about to get a new commissioner. On Oct. 7, Dr. Mark B. McClellan, a member of the President's Council of Economic Advisers, sailed through a confirmation hearing with the support of Senate Health, Education, Labor & Pensions Committee Chairman Ted Kennedy (D-Mass.).

The highly regarded former Stanford University health-care economist, whose brother Scott is a Bush spokesman, will need all the friends he can find. Health & Human Services Secretary Tommy G. Thompson is charting a controversial course for the FDA, including possibly looser regulations for drug advertising.

McClellan, who has little managerial experience, faces daunting personnel challenges. He must bolster the sagging morale of employees as the Administration shifts the agency's direction. And he'll try to keep the FDA staffed up despite retirements.

McClellan also faces tough policy questions: Should the agency approve drugs faster and allow potentially riskier products on the market? Can it ensure the safety of imported foods? And should the FDA permit generic versions of biologic drugs such as insulin?

Unlike ex-FDA chief Dr. David A. Kessler, who angered the first President Bush with his crusades, the new boss is unlikely to push a personal agenda, says Harvard economist David Cutler, a frequent collaborator of McClellan's. "He's a just-the-facts guy. That's very, very refreshing."

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