Press Briefing by Conference Call with OMB Director Joshua Bolten

3:20 P.M. EDT

DIRECTOR BOLTEN: Thank you very much. This is Joshua Bolten. I'm the Director of the Office of Management and Budget at the White House. And I'm prepared to do a quick briefing on the requests that the President is sending forward today, some rescissions and a reallocation package in connection with the Katrina disaster.

I think what I plan to do is plan to talk for about five or six minutes' briefing. I understand that we have not yet gotten fact sheets into the hands of reporters -- I apologize for that. I understand those will be ready to send out shortly. I know there are other things going on today that are of interest. So that we can make the best, although not necessarily most entertaining, use of our time, I'm going to restrict my comments to this particular budget package. And I will try to end before 3:45 p.m. because I understand that the President may be speaking as early as then.

The President is planning to send up, later this afternoon, probably within the hour, a -- rescission and reallocation packages. The reallocation package is consistent with the President's direction from the outset to ensure that the proper federal role in relief, recovery and rebuilding in the Gulf is met and that we do so in a fiscally responsible way. The President asked, and the Congress appropriated, earlier this fall $62 billion in emergency supplemental appropriations, almost all of that, $60 billion, into the FEMA Disaster Relief account. We intended that money, initially, for the rescue, the cleanup, and the sustaining of evacuees affected by the disaster. And it's also available to begin the process of rebuilding the locally owned public infrastructure.

The congressional leadership has asked, and the President directed us, to prepare an additional request at this time, to be submitted now, which is tailored toward providing funding for activities that need funding before early next year, and for which the already appropriated amounts cannot be used. So this is to give us the money necessary to do whatever needs to be done between now and early next year, when we plan to go forward with an additional supplemental funding request.

Much of the request we are sending forward today is for critical infrastructure; the total amount is $17 billion we're sending forward today. I apologize again for you all not having the fact sheets in your hands, and I will just, I think, read off a few of the big-ticket items from that fact sheet.

In the critical infrastructure area, there is $2.3 billion for highways; there is $1.6 billion for levees and waterways; in the category of revitalizing the economy, there is over $400 million for agriculture; and in the federal facilities area, there is over $3.3 billion to reconstruct military bases that were badly damaged during Katrina, both in Mississippi and Louisiana, and, I believe, some in Alabama, as well. There is over $1 billion to the Veterans Administration to reconstruct some facilities that were destroyed or damaged, especially in the New Orleans and Biloxi areas, and a variety of other things that you will see on the fact sheet. I hope that gives you a flavor of what -- of the kinds of things that are in the $17 billion request.

The $17 billion reflects no net new federal spending in our request, because at the same time that we are asking for money to be placed into accounts to be spent for these purposes, $17 billion worth of purposes, we are taking that money out -- proposing to take that money out of the $60 billion FEMA Disaster Relief Fund. We believe that with that money, with the $17 billion taken out of that FEMA account, we will still have ample funds through approximately May of next year to do -- to accomplish all of the purposes that need to be accomplished with that FEMA money, which includes the recovery, the relief, the debris cleanup, sustaining the evacuees, and beginning the process of rebuilding the public infrastructure. So we don't see the rescission of money from the FEMA account as posing any impediment to our ongoing activities through at least the early part of next year, by which time we expect to have come forward with an additional request to the Congress.

Separately, but at the same time, we are sending up a package of rescissions of existing appropriations, amounting to $2.3 billion, largely seizing unfunded obligations from -- or rather unobligated balances -- sorry -- seizing unobligated balances from lower priority programs and those with excess funds. And that is going up at the same time, and is part of the President and the leadership's overall effort to restrain spending in this time when we have these emergency demands being placed on the federal budget.

That overall spending restraint effort also encompasses a very important effort to keep spending in the 2006 appropriations bills down, and we believe -- the administration believes that the Congress is on track to meet the President and the leadership's goal of achieving an actual cut in non-defense spending -- or non-security-related spending in the 2006 budget, and, at the same time, achieving savings in our entitlements programs through the reconciliation process.

I've talked already longer than I intended and, at this point, I'll open it for questions.

Q: Hi, thanks very much. A two-part question: Is there any money being requested in this package for low-income energy assistance that has been debated on Capitol Hill? And part two: You've had two months now to -- since the hurricane. Do you have yet a better feel for the overall dollar amount that this whole thing will ultimately cost the federal government, other than those early $200 billion figures?

DIRECTOR BOLTEN: First, on the low-income -- gee, I forget what LIHEAP stands for, but the heating and energy assistance program, I guess -- there is not a request contained in this reallocation for that purpose. The administration is supportive of additional funding in that area. We believe that can be taken care of in other vehicles; in particular, the -- at least in the House reconciliation package, as it now stands, we expect that there will be supplemental funding for the LIHEAP program contained, as well as offset, in that package. So we do agree that additional resources will be needed in that program. We're just pursuing it through a different venue.

That reminds me, by the way, that there are others of the President's initiatives that we also think will be covered in other legislative venues than this, or are already underway in other legislative venues. You'll see them on your fact sheet when you get them. But that includes assistance for education -- that's mostly the children of evacuees who end up in other states, reimbursement to states for their -- for the schools where they end up. It includes health care assistance to the states where evacuees have ended up. It includes the President's Gulf opportunity zones, tax incentive proposals, and his worker recovery account proposals. But none of those you will find appearing in this particular package, but we feel good about the venues in which -- the parallel venues in which they might process.

The second question, Richard, was about the total dollar amount, and the answer is, no, it remains premature to speculate about what a total dollar amount might be in this. I think what you can be sure of is that most of the estimates that have come out so far are not well-grounded in the facts on the ground, many of which are still emerging. What we do know so far is that the Congress has made available more than $64 billion to date. We're coming forward with an additional request today that reallocates some of that money, but that we anticipate that with that reallocation we will be well-funded to carry out the activities that need to be carried out between now and early next year.

Next question.

Q: How will this money be administered? It's being taken out of the FEMA account. Is it earmarked for specific projects at this point?

DIRECTOR BOLTEN: I'm sorry, I missed the beginning of the question. Say it again.

Q: I'm wondering how the money will be administered.

DIRECTOR BOLTEN: By FEMA.

Q: Well, is it FEMA that's going to be deciding which projects get built?

DIRECTOR BOLTEN: Oh, of the requests that we're making today, no, the money in the $17 billion that we're reallocating today is -- it basically goes into specific accounts in the individual agencies. For example, the highway money will go into the Transportation Department's accounts; the money to rebuild DOD facilities into their accounts. There's a substantial amount of money going to NASA, because they lost some important facilities down there. I'm going to look at my sheet and tell you how much that is. It looks like it's somewhere in the neighborhood of $400 million is going to NASA in this request to rebuild their facilities. And that does not get cycled through FEMA, that goes into the -- each of the agency's individual accounts. Is that the question you were asking?

Q: Yes, that was the question, was the money already spoken for.

DIRECTOR BOLTEN: Oh, in the -- that we're reallocating?

Q: Yes.

DIRECTOR BOLTEN: No, that was money that was basically there for FEMA to allocate as it was needed. And our calculation now is that we can take this $17 billion out and not disadvantage any needs that might arise between now and early next year -- we think roughly through May -- we won't disadvantage any needs or any calls that might need to be made on the FEMA accounts.

Q: How much has been spent out of the $62 billion as of today? Do you know?

DIRECTOR BOLTEN: Allocated so far out of the -- out of that FEMA account, or out of the $62 billion, is roughly $20 billion. And in the fact sheets we'll have a little bit more -- a more granular breakdown.

Q: Originally I think it was you who predicted that would be enough -- $62 billion would be enough through, say, early October. It seems like some of the estimates were off. Can you say why?

DIRECTOR BOLTEN: Estimates were off. The original estimates were based on the pattern of spending that was unusually high in the immediate aftermath of the disaster. So we underestimated the needs beforehand. I think we've somewhat overestimated the needs afterwards.

One other factor is that as we made the request, the remaining money that we would leave in the FEMA account we believe is needed, and will be used, and needs to be there to give assurance that the money is available, but -- for example, money to support the evacuees is money that we requested -- all that we expected to need for the -- for more than the coming year at the time we made our request. But as of today, obviously, there's a substantial portion of it that has not yet gone out the door. So the fact that the money is not yet specifically allocated doesn't mean that the original request was greatly overestimated.

Q: One last thing. The Louisiana congressional delegation wants to -- an assurance from the administration for a share of federal offshore oil and gas royalties to sustain the rebuilding along the Gulf Coast. Is that going to happen? Or does the administration support that?

DIRECTOR BOLTEN: Whether it will happen, I do not know. The administration has not been supportive in the past of efforts to dedicate the off-shore oil revenues to a particular state treasury, but I imagine that is something that we'll be working on in the legislative process. It is not part of this request, or, we anticipate, this immediate process.

Q: Hi, Mr. Bolten. Tell me a little bit, this $17 billion, how does it differ from the so-called $20 billion that we're hearing is going to be coming up for the next leg of rebuilding?

DIRECTOR BOLTEN: This may be the $20 billion that you've been hearing about.

Q: Is that right?

DIRECTOR BOLTEN: Yes. We will be making another request, I expect, early next year. But we think that with this $17 billion, we will have met the needs that will exist between now and early next year.

Now, there are some -- you've triggered an important point with me, and that is that there are some important elements that do yet need to be determined, but that require a fair amount more of consideration, both down in the Gulf region and in Washington. One of them is what the federal role ought to be and what the objective ought to be in restoring wetlands and altering the levee structure down in the area there. You won't see that in this request. It's really premature to try to put a dollar figure on it at this point.

Q: The rescission money, is that FEMA money that is rescinded?

DIRECTOR BOLTEN: The $17 billion is money that we're reallocating. The $2.3 billion -- I don't believe there is any FEMA money in there. It's coming from about 55 different programs. It is largely unobligated balances from '05 appropriations. Bear in mind that the '06 appropriations are still in gestation.

Q: It has nothing to do with the hurricane then?

DIRECTOR BOLTEN: No.

Q: Okay.

DIRECTOR BOLTEN: This is just us going in and trying to -- trying to find good savings in the existing discretionary appropriations where we can.

Q: Thanks for your help, sir.

DIRECTOR BOLTEN: The unobligated balances that I referred to are -- is money that has not been spent in programs which -- into accounts into which it was appropriated. We have stepped in, and where the program was either a low priority, or where we believe it's clear that the amount of money in that account is not necessary to fulfill the purpose of the program, we've gone in and proposed to take that money out and use it as savings to the federal treasury.

I better take two more, and then we ought to be off the line.

Q: Mr. Bolten, I just wanted to ask about something that Senator Frist's office mentioned to me today. They said they expected this package to be coming, but, also in the next few days, another package to deal with the avian flu. Can you talk a little bit about that, about the timing and what that would do?

DIRECTOR BOLTEN: I cannot. We have been in close consultations with members on the Hill about the needs to deal with a -- the threat of a pandemic. But at this point, I don't have anything to announce. I expect that there will be word out of the White House shortly about the administration's proposals on dealing with the pandemic threat.

Q: Would that be something the President would talk about on Tuesday, or he might talk about a package?

DIRECTOR BOLTEN: I would expect that the President will be talking about this. He's talked a lot about it. He's spent a lot of his own time focusing on it. So I would expect that when we have announcements to make about a pandemic, that the President will be involved.

Q: Hi, Mr. Bolten. The leadership has made it clear that they're not going to rush this request through, as they did with the initial two requests, or send it too quickly. Is there anything in this request that needs to be handled urgently? And secondly, what are the types of things that you're looking at that would be coming in the requests you're referencing for next year?

DIRECTOR BOLTEN: First, as to urgency, I do not believe there's anything in this request that requires immediate action from the Congress. We were very grateful for the first two tranches that we got, the rapid action that we did, and in order to make sure that there was ample money in the FEMA accounts to accomplish the immediate rescue and recovery needs.

We don't see that sort of treatment as necessary here. And the leadership has indicated to us, and we agreed, that we should present this proposal with ample time for the Congress to consider it before their projected adjournment, which could be coming up in just a few weeks.

But we think that we've -- that there is ample time for the Congress to give this the kind of consideration that it deserves, and they want to give it. And I don't think as long as these requests are acted on during the course of the next few weeks, that is while -- during this session, I don't expect that there will be any problems created.

I apologize. Give me the second part of the question again. Did I answer the first?

Q: Yes, you did. What are the types of things you're looking at for early next year? And one other thing. Senator Gregg suggested that Congress ought to consider a windfall profits tax and use the proceeds to help pay for LIHEAP. Is that something the White House would look at?

DIRECTOR BOLTEN: We're always glad to look at any suggestion from Senator Gregg, who is one of the great budget leaders up on the Hill. I have not heard any discussion around here of any such proposal, or for that matter, any tax increase. But the good economic numbers we had today, that -- the GDP growth of 3.8 percent, we believe is in substantial part the product of sustaining a strong, low-tax environment here. And the President is not interested in jeopardizing that with tax increases.

But as to the kinds of things that might be done early next year, I highlighted one, and that is -- that requires a fair amount of study and consideration is, what, if anything, additional needs to be done from the federal treasury with respect to wetlands protection and the levees in New Orleans. The basic reconstruction effort is already underway, and will be funded in part through the reallocation that I've described to you this afternoon. But there are a lot of proposals to do more than that, and that's the kind of thing that will need to be considered early next year.

In addition, we do expect to seek to put additional money into the FEMA account sometime early next year, in order to accomplish the objectives that that account is allowed to do, including the rebuilding of public infrastructure. That's a traditional FEMA role, is to rebuild public infrastructure in the affected areas, and our expectation is that we will need at least some additional money to assist in the rebuilding of local schools, roads, courthouses, other public facilities.

All right, I see it's 3:45 p.m. I apologize for the truncated version of this, and hope you'll be able to get what you need from the fact sheets. If you have additional questions, I encourage you to feel free to contact Scott Milburn, Press Secretary here at OMB. Thanks all.

END 3:46 P.M. EDT