Yesterday, Peter Orszag, the outgoing Director of the Office of Management and Budget (OMB), gave his final public speech, suitably at the Brookings Institution where he had long worked before directing the Congressional Budget Office and then the Office of Management and Budget.
Unfortunately (and unsurprisingly), Orszag was measured and uninteresting. He highlighted the passage of the stimulus package, health care reform, and efficiency improvements in the federal government. He also spoke briefly about the plan for future deficit reduction.
He did get in one last statistical prediction, claiming the health care bill would lead to a reduction of the deficit by 2.5% of GDP after 75 years (a very accurate estimate, to be sure).
On further deficit reduction, Orszag sensibly argued that austerity measures need to be taken, but that it is a matter of timing. Saying, “It would be foolish to dramatically reduce the deficit immediately,” because that could impede the recovery, he nevertheless stressed the importance of eventually bringing the deficit under control. He described the steps the administration is taking to control the deficit, which include an overhaul of the health care system, a three-year freeze in discretionary non-defense spending, and a removal of inefficiencies in the federal government.
Taxes were not at the forefront of the discussion, perhaps accidentally suggesting that America’s current fiscal problem is a spending issue, not a taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. one. However, the expiration of the Bush tax cuts did come up a couple of times.
Asked if he would advise the President to veto a bill to extend the Bush tax cuts to those making over $250,000, Orszag repeated the Administration’s policy against extending them. He would not weigh in personally on the issue, he said, because by the time the President saw such a bill, he would be a private citizen. By that argument, Orszag should also refrain from quoting estimates on the deficit-reducing power of the health care reform 75 years from now, at which point he will have left more than the OMB.
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