BRIAN LAMB, HOST: Josh Bolten, what is the Office of Management and Budget?

JOSHUA BOLTEN, DIRECTOR, OFFICE OF MANAGEMENT & BUDGET: It is a portion of the White House, a very large portion of the White House, that has responsibility over all for both the federal budget and for the general management of the functions of government.

So it’s a very big (INAUDIBLE). We see almost everything that comes and goes in government. But we try to play a behind-the-scenes role, helping the president and the rest of his senior advisers formulate the policy for the government.

LAMB: Where is your office physically?

BOLTEN: My office is in the Eisenhower Executive Office Building. It used to be called Old Executive Office Building. It’s that big thing that looks like kind of a haunted mansion right next to the White House.

It’s inside the White House gates. And it was built in the early 1880s originally to house most of government that was not in the White House or in the Treasury Building.

LAMB: When did the OMB director become a member of the president’s cabinet?

BOLTEN: The OMB director has been in the president’s cabinet for some time. In the Nixon administration it went from being the Bureau of the Budget to the Office of Management and Budget.

The first person who made that transition was George Shultz who was the first director of OMB. And he was a member of the cabinet. And since then, all of the directors have been members of the president’s cabinet.

LAMB: How many people work for him?

BOLTEN: About 500. And something I’m especially proud of is that there we are inside the White House gates and of those 500, about 475 are career civil servants, and really, among the best civil servants in government, a terrific cadre of very experienced professionals, much higher than average tenure in government.

And they accomplish a remarkable trick, which is pretty hard to do, and that is that this is a group of civil servants who are able to be loyal to a president of whatever stripe. There is an enormous amount of loyalty there to the president, as I think there was for presidents of other parties as well, and an enormous amount of confidences that need to be kept within the OMB walls, and they are kept. I’ve been there almost two years and never had a leak.

LAMB: Now what do you think, just a career civil servant, one of the 475, would say about the mark you’ve put on the office? What would they say about Josh Bolten? Because you know every OMB director had their own style, their own quirks, or whatever it is.

BOLTEN: I -- well, let me tell you what I hope they would say. And maybe bring one of them on the show and let one of these great career civil servants talk about the agency from the much longer view, but something I hope they say that I’ve brought to the office is an appreciation for the president’s policy agenda, and an ability to integrate OMB into that whole policy agenda so that we’re not just narrowly working on specific budget items, but we’re working on the whole policy agenda.

We’re a participant in almost everything that is high on the president’s priority list, and we have a good voice in that. I think I bring that. I don’t bring a lot of tremendous budget experience. I’m a policy geek, but I’ve never been deeply involved in budgeting matters before I took this job almost two years ago.

But I have been a part of the president’s senior team from the beginning, from the beginning of his 2000 campaign. And so I have -- I hope what I’m bringing is a good appreciation of what is important to the president and how we can contribute to accomplishing his agenda.

LAMB: Let me try again. Things that -- personally, the thing -- the stamp that you put on it. I’m not talking about policy stuff, I’m talking about, what do they say when they look at -- there’s Josh Bolten up in that front office, he doesn’t like us to do this? Or he insists that everything that comes out of here does this?

BOLTEN: Let me tell you again what I hope they’re saying, and that is that he likes us to be informed, that he likes to integrate the career and the political staff so that everybody is operating from similar sources of information, and that the career people are well integrated into the process.

Now they might say some other things, too. I mean, they -- we -- just last week, we had “Budget Examiner Day,“ which is a -- supposed to be a super secret, controlled event in which the career staff put on skits and videos and singing and things like that, most of which is directed at making fun of the political staff, the temporaries who come through in four-year cycles, like me.

This year I had my band come out and play. We named Deficit Attention Disorder, and we did a couple of rock ’n’ roll numbers with fractured words that only budget geeks would think were funny.

My guess is that they would look at me and say, yes, there’s the strange guy who brought his band out at BE Day.

LAMB: There are also things about you that when they write about you they talk about your Harley. You have just one motorbike? One motorcycle?

BOLTEN: No. The Harley is the one ride most frequently. But I have a couple of other motorcycles that don’t ride very much. There is one motorcycle that’s down at the president’s ranch.

My previous job was deputy chief of staff to the president, which meant I traveled more with the president. And that meant I was down at the ranch on a regular basis with him. And so I have kept a motorcycle down there as well. But the one that I ride most now, the one that’s really close to my heart is the Harley-Davidson Fatboy, a 2003 anniversary edition.

LAMB: Why do you do that?

BOLTEN: You know, I’ve ridden motorcycles for a long time, it’s not just a midlife crisis adoption. I’ve been riding motorcycles for about 25 years. And I enjoy it now I think especially because it’s a form of relaxation and diversion that beautiful and exhilarating. But you have to concentrate. So you need to clear your mind of everything else, because if you’re not concentrating properly when you’re riding a motorcycle, you’re putting your life in danger.

LAMB: Let me -- you have had a lot of different in government, let me go through a couple of them and tell us what you learned. When you think back to the days when you were a lobbyist in the government, in the Bush administration, and that was the first Bush administration, I believe, what did you learn from that experience?

BOLTEN: You know, I wasn’t -- the job you’re referring to was the very last year of the first Bush administration. I worked in legislative affairs in the White House. I spent the three years before that as general counsel to the U.S. Trade Representative’s Office.

And that was my expertise, was trade law. So I was deep into trade policy and trade law for the first three years of the Bush administration, the Bush 41 administration. And then for the last year I went into the White House itself and worked in legislative affairs.

But I wasn’t really a lobbyist. I was the inside deputy, which meant -- for the legislative affairs operation, which meant I was the guy that was kind of coordinating the paper and made sure that everybody knew coordinating with the rest of the White House staff.

And I learned some valuable lessons from that. First I learned how a White House works, even though I was there for less than a year. I think I got a pretty good window on what works and what doesn’t work in a White House structure. That has proved unexpectedly valuable to me in the jobs that I came back in.

LAMB: Well, what does work?

BOLTEN: Clear lines of responsibility and clear paths of information and clear decision-makers in charge. And I saw both in the previous administration.

LAMB: What doesn’t work?

BOLTEN: I saw some of the reverse in the previous administration as well, where there might be two or three people in charge of the same thing, or there might be two or three different paths into the president for a decision on a particular issue.

So that when I had the chance to come back into the White House as Andy Card’s deputy -- during the president’s campaign I was policy director of the 2000 campaign, and I came into the White House deputy chief of staff for policy. So in a way kind of a continuation of the job I had.

But coming in as Andy Card’s deputy, he and I were, I think, two of the only people in the whole administration or the whole White House team that had had previous White House experience. There was one other, was Joe Hagin, Andy’s other deputy.

And the three of us got together and made a really concerted effort to make sure that the organization of the White House, the policy process, was structured in a way so that it was clear what path your were supposed to go down, and who was responsible for making decisions.

Some of the most difficult things I saw in previous administrations were situations in which that was unclear and it made for difficult decision-making, it made for mistakes, and it made for a loss of momentum out of the White House, which is a very difficult thing, especially in a campaign year, as -- which was the year that spent in the Bush 41 White House.

LAMB: Now you -- when you were deputy chief of staff, physically how far away were you from the president?

BOLTEN: Oh, the real estate was great. I was, I think, two or three doors down from the president.

LAMB: Saw him how often?

BOLTEN: I saw him almost every day for probably about 45 minutes a day. We structured things there so that we would put time -- we would reserve time on the president’s calendar for policy discussion. And we -- the important level that I had as the deputy chief of staff was that it was my responsibility to decide how we were going to use that time.

And so I would say, OK, we need to talk about the tax agenda. And I would ask the head of the National Economic Council to come in with the appropriate advisers and have a discussion about the tax agenda. So that meant -- and I was always in those policy discussions, so that meant I was with the president at all of his policy discussions and a few other things. So that meant probably on average about 45 minutes to an hour a day.

LAMB: What do you see in him up close that we don’t on television?

BOLTEN: You know, I’m sometimes surprised at what people miss about the president because it’s so obvious to me and others who have been on his staff. But the things that I have been struck with when I’m close to the president is, first, how quick he is.

He doesn’t like to project the image, but he’s enormously bright and especially quick. He picks up on things immediately. And even a very complicated issue you bring to him he has -- I think the right word is instinct, because I don’t think it’s something you can learn. He has an instinct for knowing what the core issue is that really is -- what unravels the whole problem.

So he’s very bright and quick. He’s also just an extraordinarily decent person. I think people have learned that about him. But he’s a very natural person that puts people at ease and I think engenders a lot of loyalty from all the folks around him.

One of the real hallmarks of this White House is that there’s a lot of loyalty to the president. And that extends out to the rest of the staff. It’s -- the atmosphere on the staff is very good.

LAMB: You said, though, he doesn’t like to project that quickness.

BOLTEN: I don’t think he does. I think he used to like to be underestimated or, as he apparently once said, “misunderestimated.“ But even beyond that, he’s a regular guy. And I don’t he likes to project the image of an egghead or something like that, which he’s not really. But he’s extraordinarily bright.

The third element is that he’s an excellent leader. He has a real keen sense of what it is to be the chief executive and what you need to know to be the chief executive, and what you need to involve yourself in. Just as important, what you don’t involve yourself in.

And some interesting experiences when I first went to work for him, which was in February or March of 1999, right at the start of his campaign. I didn’t know him. I was coming on fresh from the outside as policy director in the campaign. I think I was of the -- maybe the first person from outside of Texas to show up in Austin.

And so I was trying to get a sense of how he liked to do things. And found myself asking, you know, I would prepare a paper, and I would say, is that how you like to do it? And who do you want in the room? And how do you like the chair set-up?

And it was a funny experience because he treated me almost as though I hadn’t been speaking, that he just basically paid no attention to me. And I discovered that what he was doing was that he was preserving his own energy and his own thoughts for things he thought were actually important.

I was asking him probably trivial questions. And it was my job to figure him out. And he was then going to let me know if I did it wrong. If it was right, everything was going to go fine.

And he is -- I’ve found subsequently that he’s a great preserver of his own energy and his own intensity. If it’s an important issue, he focuses very intensely and he really gets to the bottom of it. If it’s not a presidential issue, you had better take care of it yourself.

LAMB: Tell me where I’m wrong here, born in Washington, D.C. Went to St. Albans school for how many years?

BOLTEN: Just for high school. I went to D.C. public schools before that.

LAMB: And St. Albans is the same school that Al Gore went to.

BOLTEN: Mm-hmm.

LAMB: Princeton ’76.

BOLTEN: Yes.

LAMB: Stanford Law School. Lawyer what year?

BOLTEN: 1980.

LAMB: What did you do after you got out of law school?

BOLTEN: I was a law clerk for a judge for a year in San Francisco, which was a great experience. And it was a district court which is a federal trial court judge, which is a great experience even if you’re not going to be a litigator, as I turned out not to be. But it was a great experience as the cases came and went. It was a great experience just to be in a court with a good judge for a whole year after law school.

LAMB: Did you say that your mother is the smartest person you’ve ever known?

BOLTEN: I have said that before. And she -- I stand by it.

LAMB: Is she…

BOLTEN: And I challenge anyone to…

LAMB: Is she here with us, she alive?

BOLTEN: Yes. Here in D.C.

LAMB: Here in D.C. And why did you say that about her?

BOLTEN: That’s what I think. She…

LAMB: But, I mean, what -- over the years, where did you see that exhibited?

BOLTEN: Oh…

LAMB: What did she do?

BOLTEN: My mom didn’t -- dropped out of college in her freshman year. I think she was a young freshman at Barnard and then had to drop out. And so she did not even have a college degree when I was in elementary school. But she knew stuff about everything.

She’s a tremendous reader and she has got a lot of intellectual curiosity. And she went back school while I was in sort of the middle years of elementary school and got her undergraduate masters and then doctorate degree at George Washington here in town, and taught at G.W. for many years in the history department.

And knows more about more stuff in history than just about anybody you might run into, but also just knows more stuff. And if -- I have friends, in fact, I had bosses who would periodically, if we got stumped on something, we’d just call my mom and get an answer.

LAMB: Is your dad alive?

BOLTEN: No.

LAMB: And what did he do?

BOLTEN: Almost his entire career was with the CIA. He joined -- he was in the military, spent -- was a genuine war hero, spent much of the war in a prison camp in Poland. Was then in the military government in Germany after the war. And then the CIA sent him to graduate school. And he was with the CIA basically from the beginning, for almost 30 years.

LAMB: Did he ever tell you what he did?

BOLTEN: I had a couple of job descriptions later in his career. But the short answer is no. And it’s kind of funny because I didn’t -- it didn’t seem strange to me that he never spoke about his work. But reflecting back on it, I think I can say that I honestly never heard him say a word about the office.

You could say, how was your day? And he’d say, fine. And you would say, what happened? And he’d say, the usual. Very professional. And I just thought that’s the way dads were. Dads didn’t talk about the office.

Even today I have a little trouble talking about the office when I get home. But he was part of an enormously professional cadre of agency professionals. And they just could not be more discreet and professional about how they approached their work.

He was a very gregarious guy. He was happy to talk with almost anybody about anything. He loved to talk about politics and public policy, but you never heard him say a word about what he did at the office.

LAMB: Brothers and sisters?

BOLTEN: Two -- one of each.

LAMB: And where are they?

BOLTEN: My brother, who two years older, is in Silicon Valley, where he has been since he graduated from Stanford Business School. He went to the business school shortly before I went to the law school. That’s part of what attracted me out there was he liked it so much.

And he was smart, he stayed after he graduated from business school and has been working in Silicon Valley since the late ’70s. He’s now the CFO of a software company.

LAMB: And your sister?

BOLTEN: My sister is here in Washington, living not far from where we grew up, and has worked in advertising. And now -- she’s a mom now, and a terrific mom at that.

LAMB: When you read about the little you can find on you in the media and the press, they -- things that are said about you, that you’re quite quiet, secret about what you’re doing. And they use the word “secrecy“ all the time, that you’ve often worked in secrecy. Let me just stop there and ask you, when you read that, what’s your reaction?

BOLTEN: I think it’s inaccurate, but it’s -- I do try to operate below the radar screen unless it’s useful to be above the radar screen, especially in the job I used to have, the deputy chief of staff for policy. There was no reason, I thought, ever, for me to have publicity.

I had some terrific responsibility working with cabinet officers to help coordinate their policies, to make sure that they were getting their information to the president that they wanted, and that the president’s decisions were being effectively carried out by the rest of the White House and the cabinet.

In that role, I thought it was important that I be trusted as an honest broker because there are a number of roles like that in the White House where you can’t have everybody going in and dealing with the president all the time. And you need to trust the people who have the responsibility for doing that.

And I thought and still think that in that kind of role, it’s best that you keep yourself out of the equation. And in that way, make sure that others have confidence that you’re not running your own agenda, you’re just running the president’s agenda, which was my objective, still is.

LAMB: And one thing we have not talked about at all is your London-based Goldman Sachs job. How long were you there and how long were you at Goldman Sachs?

BOLTEN: Five years, all in London -- almost all in London, from the beginning of ’94 until I left to join the Bush campaign in Texas. And I was technically in the legal department there and worked on a lot of the public policy and regulatory issues for a big American investment bank operating all over Europe.

It was fascinating job and a very interesting time to be there because it was a critical period in the economic integration of Europe that has proceeded very rapidly over the last decade.

LAMB: How did you get a job with the Bush trans -- I mean, the political team in the first place? How did that work?

BOLTEN: The Bush 43…

LAMB: Yes, when you started out this president.

BOLTEN: The -- it’s actually -- it’s an interesting story. I was back here and was -- it was Christmas of ’98. I had been talking with the chairman of Goldman Sachs about coming back to work directly for him. And while I was here, the person who was going to be involved in the Bush campaign contacted me and said I’d been recommended as somebody who might interested in working on the campaign.

Went in to meet him, he sent me down to Austin in early January. And I had a chance to meet four people. I met only four people while I was there. Had breakfast with Karl Rove, then met with Karen Hughes and had lunch with Joe Allbaugh, who was effectively chief of staff to the governor at the time.

And then I met with the governor in his library at the governor’s mansion in Austin that afternoon. And I fell in love with governor and the whole operation, the whole spirit of the operation. And I thought, boy, this would be terrific if I got a chance to work on this, even though I’d be forgoing this great opportunity to work -- to come back and work for the chairman of Goldman Sachs. I thought, this is a unique opportunity. I hope they offer me this job.

A footnote to the story is that the chairman of Goldman Sachs, for whom I ended up not being able to work because I took the job with Governor Bush, was Jon Corzine, now Senator Corzine of New Jersey. And he left soon after to begin his political career.

And he and I still have a good, close personal relationship. I think he couldn’t be more wrong on most of the issues, but I have a great deal of respect for him and enjoy a good personal relationship with him.

LAMB: Why do you want to work in government?

BOLTEN: You know, I think, Brian, you know Washington about as well as anybody does, and you know it’s essentially a company town. So looking back on it, I probably wasn’t aware of it as a kid, but I grew up in a company town.

My dad was as dedicated a public servant as you would want to find. And many of his friends were dedicated public servants. And so the people whom I saw around my house and whom I respected, even those who are working in the private sector as lawyers or something like that, everybody had an interest in public policy.

And I grew up considering that maybe next to coming up with polio vaccines and things like that, which I knew I couldn’t do not being very good at science. I consider good public policy the highest calling.

LAMB: One of the fellows that is -- writes for a living about all this money stuff that you’re working on is a guy named Bob Samuelson who you probably either know or have read.

BOLTEN: I read him and I think he’s very good.

LAMB: And I wanted to -- I took this column because it put all on one page some of the frustration that he’s had with the budget and the deficit and the way the country is going. And he takes on both sides. But I wanted to read it, when I saw it I thought it would be chance for me to get your reaction to this and give from your own experience.

He said: “There is no one“ -- this is just a couple of weeks ago, “there is no one in Washington, no one with any power trying to balance the budget.“ Let me read a couple of more lines. “President Bush’s budget did not ever envision reaching a balance. The Republican Congress’ new budget resolution purports to halve the budget deficit by 2010, but does so only on the basis of optimistic assumptions. In floor debate, the Democrats never offered a realistic balanced budget, the closest they came was in the House where they promised balance by 2012.“

You see where he’s going here. What would you say to his -- that chart.

BOLTEN: First, I think Samuelson is a terrific analyst and writer. I did read this article and I was disappointed in it because it was basically just a litany of collection of all the complaints you could make about the budget situation, which is indeed challenging.

But I think the full painting isn’t quite on target. First of all, there are powerful and important people who care about balancing the budget. And they start with the president, who faced a very difficult situation coming into office, a recession, a burst stock market bubble that had caused revenues just to drop off a cliff as he was coming into office.

And then the attacks of 9/11. You combine all that together and add in a pinch of corporate scandal that undermined business confidence, and you have a very bad economic situation, and as a result, a very bad budget situation.

So as the president was just beginning his tenure, we found ourselves in a very deep budget hole. The president’s first priority was to make sure the country is defended adequately. His next priority was to restore economic growth. And then his next priority has been to put the budget back on track toward balance.

And I think he has done all three of those very effectively. The response on 9/11 and the war on terror, I think other people can discuss much better than I. The measures that the president and Congress I think got the economy well back on track. Getting the economy well back on track is the most important element of getting the budget back in shape.

And now there is a great more focus, I’m happy to say, in restoring some fiscal discipline. Now in that Samuelson piece there, he complains that nobody is looking for a balanced budget. Well, we only do five-year budgets and forecasts. It’s not realistic to expect that we’re going to reduce this deficit to zero over the next five years.

But we can make a huge amount of progress on it. The president’s goal was cutting the deficit in half by 2009. And if we hit our targets, which I’m optimistic we will, or hit something close to our targets, we will have reduced the budget deficit to well below the historic average deficit in modern times.

Now, would you rather be at deficit or at balance. Of course, you want to be at balance. But the economists will tell you that if -- as long as you have that deficit well below that historic average, as I think we’re on track to do over the next five years, if you’re there, you’re actually in pretty good economic -- you’re in pretty good shape and you’re not caught -- most importantly, you’re not causing any damage to the economy from a budget deficit of that size.

You want to keep working on it, but I think we are very realistically on track to hit our budget targets. But two things need to happen. The first one is that we need to have the kind of spending discipline that the president has called for in his budgets. And so far we’re getting it.

The Congress kept within the limits that the president asked for last year in the appropriations process. It looks like we’re getting the same this year.

And the second thing, and most important thing that needs to happen is you need to have good economic growth. If the economy is growing, the Treasury is going to be doing well from tax receipts. If the economy isn’t growing, it doesn’t matter what you do with tax and spending policy, you’re going to be putting yourself in a budget hole.

So the most important element is that we keep this economy growing. That’s where a lot of the policies of the president are focused, and I think properly so.

LAMB: David Walker was here a couple of weeks ago, and he runs the -- he’s the U.S. comptroller, he runs the Government Accountability Office. And we talked there also about the deficit. And I want to run a little bit of what he had to say and then get your reaction to him.

(BEGIN VIDEO CLIP)

DAVID WALKER, U.S. COMPTROLLER GENERAL: No matter which way you look at it, the numbers are big, they’re bad, and they’re unacceptable. There are two ways you can look at it. If you look at the so-called “unified deficit“ for last fiscal year, which ended September 30, 2004, we ran about a $412 billion deficit. But that’s net of having spent every dime of the $151 billion temporary Social Security surplus and the $4 billion temporary postal surplus.

And so if you look at the on-budget deficit, or, I refer to it as the “operating deficit,“ it’s over $560 billion, almost 5 percent of GDP. That may not be an all-time record, but it’s surely very disquieting.

And in addition, what’s more important is not where we are and where we’ve been, but where we’re heading. And that’s the real concern.

(END VIDEO CLIP)

LAMB: As you know, Mr. Walker has a 15-year appointment, so he doesn’t have to worry about the job he’s in. Is he saying -- I mean, this whole business of using the Social Security surplus as a way to keep the deficit down, first of all, what do you say about that?

BOLTEN: Well, he’s right, that what this administration has been doing, what this Congress has been doing, and in fact, going back in time, is that as Social Security money has been coming in, there has been a paper IOU sent over a file cabinet in West Virginia, somewhere to the Social Security system, and then government has been spending the money.

That’s one reason why I think the president’s Social Security reforms are so important, because I think we put ourselves much more into a system where people get to keep more of their own money rather than relying on a government promise.

But -- and I think he’s -- David Walker is right on another point, which is what’s important is where are we headed with all of this? I described a five-year situation that looks pretty good. And I think contrary to the impression given by the Robert Samuelson piece, I think it is a pretty good picture out over the next five years, out over the next 10 years. I think we will see steadily shrinking deficits as long as we keep the kind of spending discipline the president has asked for and as long as we have economic growth, as I said.

But David Walker’s point that he has been banging on for some time, and I agree with him on this is that the longer term picture does not look good. It is not because of our spending policies or our tax policies. It is because of our entitlement policies.

We have made promises in the Social Security system, in Medicaid, and in Medicare that under no scenario can the government afford to keep. And so we need to have fundamental reform of those entitlement programs if we’re going to be on a sound fiscal path in the long run.

We need to take the measures I’ve been talking about in the short run, to make those five- and 10-year numbers turn out as good as I think they will, but we also then need to dig in and make sure we’re being fiscally responsible with our entitlement programs.

The president has started that debate on Social Security and I think has put a very good outline of a plan on the table. We then hopefully will get that done and then we need to move on and take a look at Medicaid and Medicare.

LAMB: By the way, I’m not sure exactly, but I think he’s the first president since James Garfield, I may not be right about this, that has not used the veto. Why hasn’t this president used his veto?

BOLTEN: He hasn’t needed to. I get that question all the time, is, why doesn’t the president veto a bill? And the answer is that he has very strong leaders in the Senate and especially in the House where the rules are more advantageous to the majority.

We have small majorities in both houses, we have two very good leaders. And those leaders are determined to send the president legislation that he is prepared to sign.

So whenever the president has stepped up, as he did last year in the appropriations process, and said, no, you may not spend more than this much, and I signed any number of letters as appropriations bills went through, saying, here are our objections to the bill, and under no circumstances would the president accept more than this much spending.

The leadership in the Congress has stepped up and ensured that that’s the bill the president gets. So the reason why there haven’t been vetoes is that the bills that the president has said he would veto haven’t gotten to his desk.

I’m confident that we will -- maybe we will have a presidential veto somewhere along the line here in the next few years. But the reality is that I think with the good working relationship that this president has, with strong leadership on the Hill, my expectation is that many (sic), if any, vetoes will be necessary.

LAMB: As you know, your predecessor, Mitch Daniels, got cross-ways (ph) on the Hill with some of the members, including Bob Byrd and others. Part of the reason it seems that he was critical of the earmarks or what some people call pork, and as you know, they’ve never been larger, there were some 11,000 that came off of that omnibus bill in October or whatever.

Is there -- can you stop that or should you stop that? I mean, this seems to be going far beyond what anybody ever anticipated.

BOLTEN: Yes. It should stop. There is far too much earmarking going on in legislation. It has grown steadily over the last two decades under congressional leadership of both parties and under presidents of both parties.

And I think president of both parties have wanted it to end, but it’s really up to the Congress to decide that they make those judgments. And I think the Congress needs to bring itself into discipline on the earmarks.

It is Congress’ constitutional role ultimately to say how we’re going to spend money subject to the president’s veto. And I think Congress needs to discipline itself to get better control over the earmarks.

Now having said that, it’s also important to point out that while there has been this explosive growth in the earmarks, it’s still a relatively small portion of the budget. That’s not -- it’s a bad emblem and I think it’s bad government in many cases for these earmarks to go through on a big spending bills that the president can’t veto because of a few small earmarks here and there.

But there are relatively small in relationship to the overall spending. So it needs to be kept in perspective. Our deficit and spending problems are not the result of earmarking. Earmarking should be solved as a good government situation. It doesn’t solve our budget situation.

LAMB: As you know, on any given day, you can see a column or an article like Bob Samuelson’s where they start listing all the things that give one pause for the future, including the trade deficit, the deficit that we have in our own budget here, the Social Security problem, the Medicare problems, and all the spending problems.

The market has been flat for the last four or five years. What do you say -- I mean, you used to be at Goldman Sachs watching all this, if you were there now, would you be comfortable with the future?

BOLTEN: I would be. And I think the markets are actually now reflecting pretty good optimism about the economy since the recessionary period that prevailed as the president entered into office.

And since the burst stock market bubble, the markets are back up substantially. Not a great deal of gain over the last year, but still reasonably health markets, good growth. We’ve had growth in the 4 percent range in some quarter recently, which is excellent, real growth in the economy.

Our economists are projecting forward out over the next five years growth that will remain between 3 and 4 percent, which is very strong growth. And it is coupled with strong productivity growth, which is the real change in the economy from previous decades, is that we’re getting really good increases in productivity in the economy, which means we’re going to be competitive internationally into the future, that productivity figure is crucial for that.

So were still back at Goldman Sachs, I would probably be in the camp of my colleagues that is bullish on the U.S. economy, not a huge expectation of the kind of bubble growth that we had in the late ’90s. I don’t think anybody should expect that. And actually I think we found out that those periods end up being detrimental to solid, sustained growth.

But I think very solid growth going forward. And I’d be optimistic about it. There are things that can challenge that good scenario, but the ones that we’re able to deal with, we should deal with.

LAMB: Is there still such a thing called the “OMB clearance process“?

BOLTEN: Yes.

LAMB: I mean it’s a part of the…

BOLTEN: Vigorous.

LAMB: I mean, it’s the part of what you do that no one sees.

BOLTEN: Yes.

LAMB: Explain it.

BOLTEN: The -- somebody in government, somebody in the administration needs to be responsible for ensuring that all of the utterances that come out of the administration are essentially consistent with the other utterances that are coming out of the administration, and most important, consistent with the president’s overall policy. That role falls to OMB.

That’s one reason why we have 500 people there. It is that a lot of them spend their time on this coordinating role for the rest of the government. So if you’re an assistant secretary in a cabinet department, ready to go testify about aviation policy, if you’re a secretary of -- an assistant secretary of transportation, your testimony needs to come over to OMB.

And we have an excellent office of people there experienced with knowing what the president’s policies are and knowing who else in the government needs to know about the subject matter that you’re testifying, and sends that testimony around, and hopefully in the least disruptive and time-consuming way possible, gets back to you and says, yes, your testimony is OK, or, no, the State Department disagrees the part you said about the international negotiations, and so we need to change the testimony this way.

It’s a big role, you’re absolutely right. It’s almost completely covert as far as the outside public is concerned. But internally in the government, it’s a very important role and I think well-recognized.

LAMB: But doesn’t that give you an enormous amount of power?

BOLTEN: No. It gives me an enormous responsibility. If it were my power to actually change the policy every time a piece of testimony came in or a letter or a proposed bit of legislation, or a regulation, if it were my power to change it every time, then that would be a disproportionate amount of power.

But it’s really just my responsibility to make sure that the president’s agenda is properly reflected and that all of the interested parties within government, of which there can be many, in the transportation sector, maybe that you need to -- you have an international element.

It may be that you’re affecting what labor unions do, so the Labor Department needs to know. It may be that you’re affecting the security procedures, so the Department of Homeland Security would need to know.

It’s my job to make sure that all of those elements have their seat at the table. It’s not my job to tell them what their position is.

LAMB: But go back to transportation, let’s say the Transportation Department wants a piece of legislation that they’ve proposed. They send it into the process, and you send it to the Justice Department, send it to Commerce Department, maybe even have a defense element, over to Defense, then Homeland Security, don’t the lobbyists get into this mix in the middle of that, trying to get a policy out of OMB that they like, or stop something? I mean, how many times does something stop in the process?

BOLTEN: We try not to be a constipator in the process, unless somebody is proposing something that is inconsistent with the agenda. We try to be a facilitator in the process. So the actual stopping is rare. As to the lobbying, we get some lobbying coming into OMB, but for the most part the lobbying happens when it gets outside into the political process, which I think is much more where it belongs, more in the open.

I don’t have any objection to getting lobbying into OMB, because we often get useful information. But we need to treat that neutrally. And we need to make sure we’re getting information from all the relevant parties.

Most important, we need to make sure that we’re properly deferring to the cabinet agencies and to the White House policy units that really have the responsibility for setting policy. Ours is a coordinating role.

LAMB: How often do you have to say no?

BOLTEN: Every day.

LAMB: Give us -- I mean, I’m sure you’re not going to name the cabinet officer, but the cabinet -- one of your fellow cabinet officers wants something from you, wants something in that budget, how do you say no to them? You’ve got to sit at the table with them.

BOLTEN: You know, when the president first asked me, he called me in and said that he thought Mitch Daniels, my predecessor, would probably be leaving, and asked if I had any ideas of who a good replacement would be. And I had gotten a sense from Mitch that he was preparing to go back home to Indiana and run for governor and that we would need a replacement.

And I came up with -- I had some names in mind, I gave them to the president. And the president said, how about you? And I said, no, in a way that you don’t usually talk to the president. But it was a visceral reaction. And I had that reaction not because I didn’t think it was a terrific job, but because I thought you needed a particular personality to do this job properly.

And Mitch Daniels has it. He is a very bright, very analytic person who doesn’t mind a little bit of confrontation. And when he thinks he’s right, doesn’t mind saying no. That’s quite my personality. I think I’m probably -- even in a business context, I find myself to be a softer person than I perceived Mitch to be.

And I thought, well, you need somebody harder than I am to do that budget job. Well, the president ultimately decided that I was probably hard enough. And I’ve learned over time that it’s difficult to say no consistently, which I have to do, because everybody wants more resources than our budget will permit.

But if you’re straight up with people, if you give them a fair hearing, and I’m talking about my cabinet colleagues here, and if you put their requests in the context of all the other competing demands, my experience is that it goes down pretty well, like I said, as long as you’re direct with people about what’s going on.

I’ve tried to be, I’ve tried to say no in as courteous a way as possible, it hasn’t always worked, but in most cases it works OK.

LAMB: Mitch Daniels went on to be governor of Indiana. Do you have any interest in elective politics?

BOLTEN: Well, you know, I’m a native of D.C., so…

LAMB: Yes, right.

BOLTEN: … I think the only offices open to me would be…

LAMB: Mayor?

BOLTEN: Would be something like city council or mayor. I think I’m probably not only ill-qualified for it, but I don’t think I’d make a very attractive candidate, as much as I love D.C., by the way.

LAMB: This, what I’m about to hold up here, it’s blown up, because I wanted the audience to be able to see it. But you can find this on your Web site. And up at the top it says, “executive branch management scorecard.“ And then there is a color scheme. If we can get a little closer you can see the different.

You’ve got yellow and green and red, which all mean different things. What is this? Is it available to the public to see? Some of these departments have a lot of red, go across here, it’s, let’s see, the Veteran’s Administration. Red on competitive sourcing, red on financial performance, red on e-government, and red on budget performance, what does it mean if you’ve got red?

BOLTEN: Red is bad, green is good, yellow is somewhere in between.

LAMB: And OMB, by the way, isn’t doing very well, either.

BOLTEN: No, no. We’re not. And I insisted that we grade ourselves as hard or harder than anybody. It is on our Web site, we do encourage people to take a look. And we want public scrutiny of how we think government is performing with their tax dollars.

This is all about results and performance. And I think it’s surprising to people in business and in the real world, the extent to which government takes a lot of their money and spends it without paying attention to what do you get out of the other end?

That comes naturally to a business. And if it doesn’t come naturally to a business, that business doesn’t survive. Government needs to do much more of the same. Mitch Daniels started this. I have a deputy named Clay Johnson who has done a terrific job advancing this agenda. He is known as Mr. Results, Mr. Performance, really focusing our government on measuring how are we doing with the taxpayer’s dollar, what kind of results are we getting, and holding people accountable when we’re not getting the results.

So we do this with agencies. We’re doing it in something called the PART process, the performance assessment rating tool, PART. We’re doing it as we -- on individual spending accounts that we’re putting out ratings, because we want to have a transparent process in which we’re judging ourselves harshly in most cases, including OMB.

But that’s the only way you actually get improvements in the system, is you measure how you’re doing, and you set benchmarks for yourself for improvement, and then you measure, six months later, or three months later, even, how are you doing in getting the results that you need.

I think this will actually be one of the quiet sea-changes in government that this administration will leave behind. The president is the first MBA president. And this is right up his alley. He is very strong on holding people accountable, measuring, and ensuring that results are achieved as the measure of what we’re doing.

And Clay Johnson has been just an extraordinary advocate of this program. I think when the eight years are done, and the historians look back, this will be one of the very important quiet successes of this administration.

LAMB: Go over your past, the Princeton experience, Stanford Law School, Goldman Sachs, working for George Herbert Walker Bush, 41, this president in the White House, government liaison with the Hill, you’re at the trade representative, along through that process, where did you learn the most that prepared you for what you’re doing now, what experiences?

BOLTEN: You know, the most intensive learning period I had, it was not really an experience, but the most intensive learning period I had was in 1999, when I lifted out of London and showed up green in Austin, Texas, as policy director for Governor Bush’s new presidential campaign.

And that was an extraordinary learning opportunity because at the then-governor’s direction, what we did was we assembled some of the best minds in the country on every important issue of public policy, and essentially ran seminars for months, helping the governor formulate the polices on which he wanted to run and then govern.

And I emphasize that “and“ part there, because he was very clear with me from the beginning that he didn’t want to campaign as one thing and then govern as another. He said, set this up so that if we win the election, we can just transfer the policies, the proposals, and even some of the people directly into the places where they would be if they were governing.

So the campaign was very much like a government-in-waiting. And the process that we went through in 1999 of formulating all these policies was just the most intense and interesting learning process imaginable if you are a public policy wonk, which I am.

We had great experts coming through. We had a really well organized process of narrowing down the issues and decide -- presenting options to the governor of how he wanted to go.

He came into the process with a very strong philosophical compass and a clear view of where he wanted to go on the big issues. We filled in a lot of the details in the course of that. And part of it was educating him, but a lot of it was educating all the rest of us.

And in reality, actually auditioning a lot of the people who ended up serving so effectively in government once the president’s administration got under way.

LAMB: You reportedly get in as early as 7:30 in the morning, and you are often at the office until 10:30, 11:00 at night, accurate?

BOLTEN: True. I have to be in at 7:30 every morning because this is an early White House. And the senior staff meeting starts promptly at 7:30. By 7:30 the president has already been at his desk probably for a half hour. He’s a very early riser, very disciplined person, especially when it comes to time. He’s almost never late. If you’re not five minutes early for a meeting with the president, you’re late.

LAMB: Why do you have to work that many hours?

BOLTEN: The two jobs I’ve had, the deputy chief of staff for policy, and the budget director job are -- just have big portfolios. There’s a lot to keep track of. There’s a lot to understand. Maybe if I were smarter I could do it in less hours, but I feel, and I think many of my colleagues feel that we are temporary custodians of these positions.

We only have a very limited time that we have the privilege of serving in these positions. And we want to make the most of that time. And there’s a lot to do, in what in reality is a very short time.

Andy Card is a terrific chief of staff. And one of the ways in which he is so good is that he really inculcates in the staff a sense that we are really just passing through for a few years.

He’s had the experience in the Reagan White House, the Bush 41 White House, now this one, to know how quickly the time passes. And two things flow from that. One is that you need to treat the office with great respect and not assume that it’s -- you own it. You’re just a tenant for the time being.

The other thing is, make good use of your time because before you know it, it will be over.

LAMB: Are you going to stay until the end?

BOLTEN: I will -- I serve at the president’s pleasure. And as long as he thinks and I think I’m serving him effectively, I’m happy to do it.

LAMB: What is your dream beyond that?

BOLTEN: You know, it’s funny, I was asked that just recently, and I was asked that when I had the deputy chief of staff job. And the answer is I don’t have one because I’m in my dream jobs, especially when I was deputy chief of staff for policy, a job which I helped shape -- I had a chance to shape when we were starting the administration, along with my boss, Andy Card.

Somebody said, well, what is your next step? What job would you like to do next? What would be better? And the answer is, if you’re a policy wonk like I am, there is no better job. And so the two that I’ve had are pretty much the best jobs somebody like me could have. And I’m pretty well occupied trying to do them properly. I don’t do a lot of dreaming about what comes next.

LAMB: What has it done to you that John Bolton, no relation -- is he any relation at all anywhere in your past?

BOLTEN: Not even spelled the same.

LAMB: Yes. What impact has that had on you at all? I mean, do people confuse the two?

BOLTEN: They do occasionally. It kind of bugs me. I think it used to bug him. I had a funny experience early on in the administration when I introduced to a -- I think it was a group of rabbis. And then gave me a lavish introduction about who I was and then expressed appreciation for the great work that my father had done.

I thought, well, isn’t that great, somebody remembers my dad, and it was a group of rabbis, and my dad had been involved in the original creation of the Holocaust Museum. So I thought, oh, they must have worked with him on that.

And I was very touched that they remembered my dad until I listened more carefully and realized that they were talking about John Bolton. And I didn’t say anything to the group at the time, but I reported it to John Bolton and his wife when I saw him a couple of nights later at a reception.

And they thought it was funny but I think they were clearly offended that anybody would think that they had a son as old as I, because I think John is only, you know, maybe five or six years older than I am, and probably looks younger at this point.

Anyway, yes, we do get confused, it’s probably annoying to both of us. But he’s in his right place and I’m in mine.

I’ll tell you one other thing, which that the -- I mentioned at the outset this BE Day, when the career staff do -- basically make fun of the political leadership. One of the things they did was that they took the head shot of, you know, my official portrait, you know, of me from here to here with the flag behind me.

And they put it in a very nice folder along with head shots of John Bolton and rock singer Michael Bolton. And they took that folder out on the mall and asked people, can you identify Budget Director Josh Bolten?

Naturally, nobody could among the group. And they got some very funny answers.

LAMB: We’re out of time. Thank you very much.

BOLTEN: Thanks for having me.

END