Early last Setember, Energy Secretary James R. Schlesinger quietly approved plans for a major expansion in his department's budding solar energy program. The proposal: A $198 million, 36.7 percent rise in outlays for solar demonstration projects -- a move likely to prove popular both with energy experts and environmentalists.
Less than two months after Schlesinger okayed the plan, his proposal had been cut back to barely a shadow of what the Energy Department had in mind. Rather than $198 million, the increase was being held to $81 million -- a rise of only 15 percent -- and the short-term projects Schlesinger proposed had been all but wiped out.
The incident wax not unusual. The naysayer in this case was the Office of Management and Budget, a quiet, 190-member White House staff that routinely makes thousands of such decisions each year on programs and agencies throughout the federal government -- with little specific authority beyond its mere existence.
Housed in the charmingly grotesque Old Executive Office Building Within a memo's reach of the White House, the OMB, as it is known, has for years been the looming presence in virtually every major and minor government decision -- able to overrule both career and Cabinet officers. There is no area of the administration's spending plans -- except for debt service -- that is beyond OMB's grasp.
In preparing President Carter's fiscal 1980 budget due out this month, OMB has exercised more power than at any time in recent years. Unlike the previous administration, where President Ford went over the entire budget line by line, Carter has left all but a handful of decisions in his $504 billion spending plan to his OMB staffers.
While some departments have appealed to the president personally, such instances have been relatively rare. For example, out of a multibillion budget that includes everything from medical scholarships to school band grants, Health, Education and Welfare Secretary Joseph A. Califano took only two OMB decisions to Carter out of 137. Appeals from other departments run about the same.
OMB has taken some raps this year, mainly criticism of its director, James T. McIntyre, as ineffectual and not up to the job. The quiet-spoken OMB chief came to the agency in 1977 as deputy to then-director Bert Lance. He was fresh from the Georgia state budget bureau, and with no real experience with high-level policy issues. The consensus immediately was that he was a lightweight.
But budgetwatchers say that image may be overdone. Although McIntyre still hews narrowly to budget issues, eschewing broad economic policy questions, he has successfully guided OMB through a tough budget year, making or approving virtually all the major spending decisions. He is still viewed as no great philosopher, but he has improved in the job.
There is considerable debate over how well OMB handles its power and responsibilities. Some critics say the agency too often has seemed arbitrary and inflexible -- far too concerned with budget-cutting for cutting's sake, with no underlying philosophy of why items should be cut or kept. It is also faulted by some for not adequately keeping track of programs.
But in general, the agency is respected both for its thoroughness and fairness in almost every budgetary matter.
"Compared to your average government agency, OMB is way above, both in its analysis and in the caliber of its staff," says Robert Hartman, a Brookings Institution budget-watcher. Most other analysis agree.
OMB's powerful so long as it is perceived as directly reflecting the president's wishes," says W. Bowman Cutter, the agency's curren associate director.
OMB also frequently wins battles because it has more expertise than many of the departments and agencies whose proposals it reviews. While OMB, like other agencies, has some conspicuous thin spots, its examiners are experts in their fields -- often career specialists with long perspectives on what has been tried before.
OMB reviews also represent the president's one big chance to shape individual programs and proposals into a single administration-wide policy. This phenomenom was unknown in the pre-World War II era, before a certral White House budget review mechnism was established. Now OMB represents the administration's only opportunity to make sure the sum of programs doesn't exceed its budget total.
As such, OMB decisions amount to White House policy statements, as well as simply budgetary accounting. When a congressional committee considers changing the administration's budget, it asks the department secretaries to represent the agency involved and OMB to speak for the administration. Budget officials are involved in policy decisions through the entire appropriations process.
The agency's work begins in April, at the start of the government's yearlong budget-making process. After an initial stock-taking, tentative budget ceilings are set by the president in June. Department and agencies pre pare their proposals over the summer. In September, OMB gets down to serious work.
The disputes with individual agencies usually take one of two forms -- quarrels about the actual level of spending a department is proposing, and disagreements over the proposing, and disagreements over the merits of a particular program. (OMB's 190 analysts are split into units that specialize in one or two areas. So, there is one OMB group involved in defense decisions, another for environmental issues.)
In the case of Schlesinger's solar energy proposal, the argument involved a little of both: With some 10,000 solar "demonstration projects" already completed or underway, OMB examiners felt the government had already shown that solar energy sysproposals, but left alone basic research proposals on how to make cheaper electricity.
To solar energy advocates, OBM's dicision was a setback, But to Cutter, it was another example of OBM's major role in the administration. Individual departments and agencies, he notes, too often have to play to their own constituencies in recommending new spending proposals. OMB does not. Sometines it provides the only way the president can say "no" nicely.
While agencies and departments often feel compelled to push programs their constituent groups favor, OMB's constraints run to overall government spending totals. White House policy pronouncements, and the impact of a spending plan on future years' budgets. "The clashes between the two are good," Cutter insists. "We both have to pay attention to each other."
Most of OMB's decisions -- the smaller ones -- are made directly by lower-level budget examiners. The agency's current hierarchy has a "cutoff point" of $25 million. "Anything that costs above that," says one insider, "gets thrown up" to the more politically attuned assistant directors. Some go to OMB director McIntyre. A handful are appealed to the president.
The negotiations often are exacting with Cabinet officers occasionally ending up taking the fight to the White House. Cutter concedes that "there's no way you can stop a Cabinet officer from going to the president about an issue," but insists most such disputer are resolved before that level. "There's a kind of balance of terror involved," one insider says.
Still, analysts say the programs that suffer most in the annual budget fracas are those administered by small agencies whose administered by small agencies whose chiefts have little or no access to the White House. "here's a guy heading an agency who sees the president only on the day he's sppointed," says one budget official. "He' bound to have less clout when it comes to push and shove."
Where the agency has fallen short, in the view of some analysts, is in the jobs it has been given beyond basic budget-making: management improvement and government reorganization. The "management" was put into OMB in the early 1970s, when the Nixon administration made it the centerpiece of its new efficency drive. But the effort never got off the ground.
Carter added to OMB's responsiblities by daddling it with his new government reorganization effort -- another area in which outsiders say the agency's performance is not as good as its budget-making operation. And Carter's new "zero-base budgeting" program -- aoso run by OMB -- is getting mixed results: ZBB has added oodles of new paperwork, with only marginal budgetary benefits.
The agency also has suffered some from competition by the new Congressional Budget Office, which has taken over OMB's once-exclusive role of providing budget analysis for Congress. Outsiders say CBO's budget-tracking now is so good that OMB makes use of congressional figures in keeping tabs on how much agencies are spending after appropriations are voted.
OMB's power has waxed and waned over the last several years, depending both on the times and the president. Nixon, veterans say, left virtually all the decision-making to OMB. Ford made many of the budget choices on his own. And now, under Carter, OMB's star is rising again.
There is no question anywhere in the government that OMB is the most influential force -- besides a rare direct mandate from the president -- that most department and agency chiefs ever have to deal with. Ask the man who runs the solar energy demonstration-projects program. Control over the government's pursestrings is Washington's ultimate in agency power.