Monitor Breakfast

Mitch Daniels is director of the Office of Management and Budget. Previously, he served as chief executive officer of the Hudson Institute (a Washington think tank), and as senior vice president of Eli Lilly.

"I treat any deficit as a negative phenomenon...at today's levels, historically, it is pretty small particularly compared to those coming out of recessions. What our report says is that there is a fighting chance to get back to balance by 2005.

"It won't be easy, but we are not going to assume the defeat of the American taxpayer. This president will do all he can to restrain spending. That is what we can control, and I would hope that everyone who wants to see a return to balanced budgets would join us in that."

"The cloud in this picture is the market – no one controls it, no one can predict it. And economists will say if it [goes] on long enough and [is] bad enough it might affect consumer decisions and that could blunt the recovery. Yes, it is a concern. And believe me, the president is very fixed on it."

"The adversary we are fighting is not encumbered by a lot of rules about whether it can move money around or change somebody's personnel assignment. Al Qaeda does not have a three-foot thick code of federal regulations to read through.

"This department is going to need to be nimble. It ought to have – frankly, it ought to have greater flexibility than HUD has today. There are some in Congress who seem to want it to have less. We can [neither] bring this department into being, nor operate it effectively, if it is totally hog-tied.

"So there ought to be some reasonable compromise. We asked for very broad flexibility. [In] Congress up to this point, the attitude seems to be zero [flexibility]. Let me just tell you: The Department of Agriculture can move a little money around, the Department of Defense can, the department of HHS can. Why does this department have less flexibility than that?"

"The worst problems? Defense, for sure. This has been reported for many, many years. There will not be an overnight solution. They have 1,000 different financial systems in the Department of Defense, I am told. It is not surprising that the books don't close quickly or that everything doesn't reconcile.

"The Department of Agriculture, as I recall, has another very serious set of problems....There has to be greater accountability. That is what so much of the management emphasis we have made is about. It is about holding up these problems – being honest and candid about them. Going to work on them.

"Accountability does not come that naturally to government."

"I am a little surprised given the extent of the coverage, [and] some of the loose, unfair things that have been said. I was struck as I guess you were by this morning's news [about a Washington Post/ABC News poll showing President Bush's approval rating at 72 percent]. Yet again, the American people [are] expressing unprecedented confidence in the president.

"The American people are showing yet again they are more mature and savvy than we sometimes give them credit for. I think they have formed a judgment about the character and the fitness of this man as they have seen him tested in his first couple of years, and they are not going to be knocked off by essentially what they recognize as bogus charges or just sort of loose guilt by association."