Orszag Leaves, Red Ink Remains

by Pejman Yousefzadeh on June 23, 2010



Now that the Obama Administration is going to see its sexiness quotient go down, it is time to consider just what Peter Orszag’s legacy to the nation is. Unfortunately, in considering that legacy, we see that the bad outweighs the good.

As Jonathan Weisman notes, the most obvious Orszagian legacy is a debt of $1 trillion. That’s right; trillion. With a T. The natural consequences of that debt will be higher interest rates, a decreased capacity to borrow when we really need to borrow, and a coming era of austerity that will lead to economic stagnation, and even recession, as we grapple with the debt that Orszag and the Obama Administration bequeathed to us. The parlous fiscal situation in which we find ourselves could have been avoided if only we chose not to implement a stimulus that isn’t working, and a health care plan we plainly cannot afford. To be sure, the Bush Administration’s fiscal policy did not help matters, but the current Administration will outspend its predecessor–and put the country even more deeply in the hole as a consequence–by a significant amount. It’s impossible for the current Administration to blame its predecessor for the budgetary morass; indeed, blame cannot even be transferred with a straight face anymore.

Just as lamentable is Orszag’s record as a cheerleader for health care reform. While he helped successfully drive the effort to change the health care system, he did so at the expense of actually instituting good policy. As James Pethokoukis writes, the drive for health care reform was fueled by massive amounts of intellectual dishonesty which we will all pay for:

. . . Orszag made the case to the president that reducing healthcare costs was an important element to slashing the long-term budget deficit. More importantly, he persuaded Obama the U.S. healthcare system was so inefficient, overall spending could be restrained while also providing near-universal health insurance coverage. In effect, “bending the curve” was a free lunch. Or at least close enough for government work.

It was an audacious claim, mostly based on a single controversial academic study. Republicans never bought into the theory, and neither did Orszag’s successor at the Congressional Budget Office, Uncle Sam’s fiscal scorekeeper. In the end, Obama was forced to cut future Medicare spending and raise taxes to make the numbers balance out — at least on paper. Few Washington observers think those cuts will happen, meaning that the budget deficit could explode if Orszag’s novel theories don’t pan out. And even if the cuts occur, many budget hawks were counting on them to make Medicare sustainable over the long-term, not create a new entitlement.

Speaking of intellectual dishonesty, in what parallel universe is it acceptable to introduce a budget that neglects to mention a whopping $3.6 trillion in liabilities? Again, this would be trillion. With a T. Any business that pulled such a stunt would have found itself answering to people called “prosecutors,” and “class action attorneys.” One doesn’t wish Peter Orszag legal trouble–despite the manifest policy failings he is responsible for, he certainly seems like a nice guy–but it is worth noting that after leaving the Office of Management and Budget, Orszag will land some cushy, remunerative position in a think tank, or a private sector company, or both. Is this the price one pays for perpetrating budgetary fraud and chicanery upon the United States of America?

Orszag’s announced departure as Budget Director has set off speculation as to who his successor will be. Whoever ends up taking the job will need a strong sense of duty and patriotism, a strong stomach, and just the right amount of insanity to want to try to whittle around the gigantic budget deficit, and the truly terrifying national debt left to use by Orszag, and by the President he has served. About the only thing that we can hope for is that whatever sexiness quotient the next Budget Director lacks, he or she will make up for with a commitment to responsible policymaking. After having had to put up with Peter Orszag’s bad calls on the budget, and on health care reform, we are due for some competence at the Office of Management and Budget.

Is it possible that we will get competence? Possibly; Orszag has set the bar so low, that his successor will have to work extra hard to fail to clear it. Of course, the setting of that low bar is the source of many of our problems, now isn’t it?

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