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Larry Kudlow: Bush's New OMB Director

I may have been too hard on Rob Portman, according to supply-side House member Paul Ryan. Paul served on the Ways and Means Committee with Portman, who favored supply-side tax cutting and was tough on spending. Though soft-spoken, Portman was always an ally of the conservative Republican Study Committee, but not a member because of his leadership position in the GOP caucus.

Mr. Portman favors personal savings accounts for Social Security reform and lower tax rates on cap gains and dividends. He also favors budget earmark reform; and in general, wants to stop the Appropriations Committee people like Chairman Jerry Lewis from running away with pork.

Portman is described as non-confrontational and never really on the front lines of conservative activism such as folks like Mike Pence, Jeff Flake, John Shadegg and other RSC members. Unlike them, Portman did vote in favor of the Medicare prescription drug bill, the No Child Left Behind education bill and the restrictive McCain-Feingold campaign finance legislation. However, he is a free trader (he voted for CAFTA and NAFTA) and he did vote against the big farm subsidies bill.

Essentially, it appears that Rob Portman is an establishment Republican with good tax and budget instincts who was close to the Republican Study Committee movement.

The problem in the White House, however, is that during the Andy Card regime, key policies were developed in the West Wing and then sent over to OMB on spending and to Treasury on taxes. This robbed those two important agencies of any real creativity to launch strong policy initiatives and then fight for them in the White House.

During the Reagan years, OMB under David Stockman sent over hundreds of budget cutting ideas to the White House, many of which were adopted as policy and subsequently implemented legislatively. Most of this occurred in 1981-82, but later on Jim Miller pushed for Gramm-Rudman as a spending limitation developed in OMB. That was subsequently adopted.

So the question is whether really tough budget cutting ideas can begin with Portman's OMB and then sent over to the White House for a far more aggressive budget cutting strategy. My suspicion is that John Snow in Treasury would have pushed for full-fledged tax reform, but the White House had no interest and therefore stopped this process. Whether the Josh Bolten West Wing operation gives greater latitude to Treasury and OMB remains to be seen.