Obama Budget Process Held Up While Senator Landrieu Keeps Lew in Limbo

The standoff between the Obama administration and Democratic Senator Mary Landrieu over an offshore drilling moratorium also is creating hurdles for White House officials putting together the next budget.

The Louisiana senator is blocking the confirmation of Jacob Lew, President Barack Obama’s choice to be White House budget director, to protest the administration’s temporary ban on deepwater oil and gas drilling, put in place after the BP Plc oil spill in the Gulf of Mexico.

The Office of Management and Budget has been without a director since the end of July, disrupting or at least delaying administration decisions on spending levels, taxes, budget cuts and the overall budget direction for fiscal 2012.

“This is an absolutely key time to have a very top-rate budget director in place,” said James R. Horney, a budget expert at the Center on Budget Policy and Priorities in Washington. “This is such a delicate time and so many big issues.”

Lew’s nomination was approved 22-1 last week by the Senate Budget Committee, clearing the way for a vote by the full chamber. Under rules that let any senator block a presidential nominee for any reason, Landrieu put a “hold” on Lew’s nomination Sept. 23. She said the drilling moratorium was having “such a devastating impact on working people and small businesses throughout the Gulf Coast.”

Landrieu’s hold is supported by Louisiana’s other senator, Republican David Vitter. “Unfortunately, sometimes holds are needed to get this administration to focus,” Vitter said in a statement.

The stalemate continued as the Senate left town to campaign for the Nov. 2 elections. Lawmakers won’t return until Nov. 15.

White House Criticism

Obama’s chief spokesman, Robert Gibbs, criticized Landrieu from the podium of the White House briefing room.

“I think it is sad, and I think it’s outrageous,” Gibbs said yesterday. “We’re not bargaining the safety of oil drilling away for an appointment.”

Lawmakers “who are concerned about our fiscal picture, who are concerned about where we’re heading in this deficit at a time of crisis, would not do the type of things that Senator Landrieu is doing,” he said.

Because the Senate technically remains in a pro forma session while out of town, Gibbs said that makes it “difficult to impossible” for Obama to put Lew in the job using a process known as a recess appointment.

Lew can’t make budget decisions until he’s confirmed. He remains in his post as deputy secretary of state, Gibbs said.

Gulf Concerns

Landrieu said she has no quarrel with the qualifications of Lew, who served as budget chief under President Bill Clinton.

Even so, “I found that he lacked sufficient concern for the host of economic challenges confronting the Gulf Coast,” the senator wrote to Senate Democratic Leader Harry Reid, explaining her opposition. “The fact that the most acute of these economic challenges, the moratorium, results from a direct (and reversible) federal action only serves to harden my stance on Mr. Lew’s nomination.”

Obama imposed the moratorium following the BP oil spill, the biggest in U.S. history, saying authorities needed to review the cause of the leak and the safety regulations for drilling.

Landrieu has said she’ll keep the hold in place until the ban is lifted.

Added Hurdles

The budget process is complicated by election-year politics, Congress’s failure to pass a federal budget for fiscal 2011, which starts today, and an administration directive to most agencies to submit proposals for a 5 percent budget cut. Agencies also have been ordered to identify their five poorest performing programs. In addition, Obama’s commission on the deficit is set to make its tax and budget recommendations on Dec. 1.

“It’s very difficult when you don’t have a budget director who has access to the president, has his authority going back to the agencies and ride herd” on preparing the budget and making spending decisions, said Joseph Minarik, a former chief economist at the budget office.

A delay also leaves murky the exact direction of the administration.

“You also don’t have the communication with the Congress on where the president is going, what his priorities are,” Minarik said. “The longer this goes on, the worse the situation gets.”

To contact the reporter on this story: Roger Runningen in Washington at rrunningen@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva@bloomberg.net

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