On June 19, Office of Management and Budget (OMB) Director Rob Portman announced his resignation, effective in August. The same day, President Bush nominated former House Budget Committee chairman Jim Nussle (R-IA) to be the next OMB director. Today, July 24, the Senate Homeland Security and Governmental Affairs Committee (HSGAC) held the first confirmation hearing for Nussle; on July 26, the Senate Budget Committee, which also has jurisdiction over the nomination, will hold its own hearings. Before the hearing, Sen. Barack Obama (D-IL) submitted a statement for the record with additional topic areas he sought to have Nussle address concerning his nomination, including the next executive order on regulatory oversight, significant delays in release of Census Bureau reports on government spending, the administration's (and Nussle's) confrontational style, particularly related to the FY 08 appropriations bills, and important tax policy questions. Overall, Obama advised to move cautiously with this nomination. Members of the HSGAC panel were generally deferential toward Nussle at today's hearing. The only aggressive questioning Nussle faced was from freshman Sen. Claire McCaskill (D-MO), on the subject of executive earmarks. Nussle fully admitted he spent time while in the House pursuing and successfully winning earmarks for his district, but also agreed with McCaskill that the real problem with earmarking was not the process itself, but the secrecy surrounding the process and lack of information on who makes earmark requests. Nussle pledged to continue to work to bring transparency and disclosure of information to the earmarking process. At the conclusion of the hearing, Committee Chairman Joe Lieberman (I-CT) questioned Nussle closely about whether Nussle believed tax cuts pay for themselves — a position Nussle said he had been quoted in a "heat of the argument" moment — and why he advocated one-sided PAYGO. Nussle said PAYGO rules that apply to both spending and tax cuts miss the focus of the country's fiscal problem — one he believed to be a spending problem and not a revenue problem. Based on the tenor and substance of today's hearing, it is likely the committee will report Nussle favorably when it reconvenes later this week. Most of the focus during the Budget Committee hearing on Thursday will be on Nussle himself, his experience as former chair of the House Budget Committee and his substantial record on budget policy and procedural issues. But the hearings could prove contentious, as some members, such as Committee chair Kent Conrad (D-ND), may use the hearings to challenge the administration's approach to negotiations over the FY 2008 appropriations. Chief among the predominant issues to watch for during the second Nussle hearing will be: The Nussle Record I — Performance as House Budget Committee chair: As a Budget Committee chairman, Nussle failed to usher through a budget resolution three out of the six years of his tenure. In 2006, his final year chairing the committee, Congress failed entirely to adopt a budget. Strikingly, during his time as committee chair, Nussle's party was in control of both houses of Congress and the White House. The burden will be on Nussle to demonstrate how, with Democrats now running Congress, his approach to completing budgets will reflect the new political reality that confronts him and what plans he has to be more effective at producing a workable budget with Congress. The Nussle Record II — Apostle of Tax Cuts, not Fiscal Restraint: Over his six-year tenure as Budget Committee chair, Nussle saw the national debt increase from about $5.5 trillion to nearly $9 trillion, an increase of roughly 64 percent — suggesting a less-than-dedicated focus on fiscal restraint. Nussle was cheerleader in the House for the administration's massive tax cuts in 2001, 2003, 2004 and 2005, helping to usher those bills through that chamber. He went so far as to declare in 2004,"Tax cuts don't need to be paid for [with offsets] - they pay for themselves" — a degree of policy orthodoxy since repudiated by the Bush administration. Nussle should be questioned closely about his adherence to this inaccurate belief especially in light of a recent nonpartisan Congressional Budget Office report that found the 2001 and 2003 tax cuts have cost $211 billion to the Treasury in 2007 alone — a far cry from paying for themselves. Nussle's strict adherence to tax cuts at any cost and mistaken belief that they will reap more revenues for the Treasury than they cost need to be carefully examined during the hearings. The FY 2008 Budget Process: After six years of stewardship over steady, significant annual federal budget spending increases, the administration has demonstrated a sudden interest in espousing the rhetoric of fiscal restraint — pushing hard to hold to the $932 billion limit the president has set on discretionary spending by issuing formal veto threats for the first time ever on "excessive" spending bills. Should the president carry through on these threats, the FY 2008 budget could be in jeopardy; a government shutdown — at least for parts of government — is possible this fall if no accommodation with Congress is made. At the Budget Committee confirmation hearing on Thursday, Nussle will almost certainly be questioned about whether President Bush's FY 2008 discretionary spending limits are "non-negotiable" and how he would break the current budget stalemate between the White House and Congress in order to help enact the appropriations bills on time. To a certain extent, some of the antagonism that Nussle may encounter from Congress stems from the sense among Democrats such as Sen. Kent Conrad (D-ND) that Nussle was "an intense partisan more given to confrontation than cooperation" during his time as House Budget chairman. This certainly raises questions of whether he can negotiate in a constructive manner the difficult issues involved in the FY 2008 budget in a difficult environment. But it may also be more about the administration's policies and approach to the new Democratic controlled Congress than about Nussle himself. It is both his previous aggressive record and style, plus the hard line being taken by the administration, that will likely be key issues as the Senate considers his confirmation as director of OMB. Conrad reported rumors of a "hold" in the Senate regarding his confirmation, but said he had no further information. In the end, the confirmation process will likely raise a welter of federal budget issues, but none sufficiently damaging to Nussle to imperil prospects for Senate approval of his nomination.