Office of Management and Budget
In January 2001, Daniels accepted President George W. Bush's invitation to serve as director of the Office of Management and Budget (OMB). He served as Director from January 2001 through June 2003. In this role he was also a member of the National Security Council and the Homeland Security Council.
During his time as the director of the OMB, Bush referred to him as "the Blade," for his noted acumen at budget cutting. The $2.13 trillion budget Daniels submitted to Congress in 2001 would have made deep cuts in many agencies to accommodate the tax cuts being made, but few of the spending cuts were actually approved by Congress. During Daniels' 29-month tenure in the position, the projected federal budget surplus of $236 billion declined to a $400 billion deficit, due to an economic downturn, and failure to enact spending cuts to offset the tax reductions.
Conservative columnist Ross Douthat has stated that Daniels "carried water, as director of the Office of Management and Budget, for some of the Bush administration’s more egregious budgets made dubious public arguments in support of his boss’s agenda." Daniels was responsible for estimating the cost of the invasion of Iraq, Operation Iraqi Freedom. The operation was estimated to last six months, and did not include a projection of the long-term cost of maintaining a military presence in the region after its immediate occupation. In 2002, Assistant to the President on Economic Policy Lawrence B. Lindsey estimated the cost at between $100–$200 billion, much higher than Daniels' estimate. Daniels called Lindsey's estimate "very, very high" and stated that the costs would be between $50–$60 billion. President Bush ultimately requested $75 billion to finance the operation during the fiscal year, and according to a 2010 Congressional Research Service report, the first fiscal year of the war cost $51 billion. The failure to provide long term cost estimates led opponents to claim that Daniels and the administration had suggested the entire war would cost less than $60 billion. The CBO has estimated the total cost of the war in Iraq to U.S. taxpayers will be around $1.9 trillion if it was carried on until 2017.
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