As Obama’s budget chief heads for the exits, he spoke to Dayo Olopade about why a bigger stimulus was politically impossible—and the administration’s plans for the Bush tax cuts.Peter Orszag is the kind of man who gets people hot under their collar. Halfway through his appearance at the Brookings Institution in Washington—an affair otherwise dominated by tie clips and tax policy—a single heckler broke into song: “Peter Orszag and Larry Summers, they’re fascist pigs, they’re fascist pigs,” he yodeled, in a reasonable baritone. The man, who identified himself as a supporter of Lyndon LaRouche, was hustled quickly from the room. Orszag flushed beneath his eternal tan. The crowd of budget wonks murmured dissatisfaction: That is not how Washington works.
Then again, Orszag’s “You Lie!” moment may reveal one of the reasons he’s getting out of Washington on Friday. The director of President Barack Obama’s Office of Management and Budget has been an unlikely public face during a year and change of tumultuous negotiations over health-care reform, two annual budgets, deficit reduction and a controversial non-discretionary spending freeze. The wonk who once wrote an obscure blog for the Congressional Budget Office (CBO) on, among other issues, poetry, became Obama’s high-profile evangelist for reducing long-term federal debt by increasing government spending on health care and job creation.
His tenure in an increasingly gridlocked Washington took a toll on him. “I’ve spent four years in government,” he told The Daily Beast after his Brookings speech. “The government is not a nimble thing.” He described being in the room during heated debates over the size and scope of the 2009 stimulus package—a raw spot with liberals who feel the flagging economy is a result of not dreaming big enough. “I can personally guarantee you there was a 0.000 probability that it could have been any substantially larger.” That decision, he later conceded, was due to political imperatives that had nothing to do with economic ones. “Were I back at Brookings, I would have been writing papers over whether this could have been done differently.”
Despite his good-faith efforts to back the president’s vision for change with charts and numbers, he became a high-profile target of the left and the right.
The liberal centre for American Progress swiped at the Orszag-backed spending freeze (which left education and research intact) as the work of “budget peacocks.” Andrew Breitbart’s right-wing Big Government blog hammered Orszag for his (incorrect) 2007 predictions about American credit and housing markets: “Orszag will move on to another think tank (probably to watch how his bankrupting the country unfolds), completely unaccountable for the financial damage he has done to America.” Andrew Zarowny of Right Pundits, also welcomed the news of Orszag’s resignation: “Given how nearly everything he says or thinks has been proven to be wrong, his sudden departure may be a blessing.”
Despite the drama, Orszag has produced results—and demonstrated surprising influence from a comparatively minor cabinet position. “They’ve done a hell of a lot in a year,” says William Gale, the Brookings economist who introduced Orszag at his farewell. At Brookings, where he had been a fellow before joining the CBO, Orzsag took the time to outline his legacy in government, from working over members of Congress during the health-care debate to assisting the team of top-flight economists who have been working round the clock to fix the U.S. economy. “We did the work of six months in six weeks,” he said, referring to the flurry of accounting that went into the stimulus package.
He cited a new paper from Moody’s economist Mark Zandi and Princeton University’s Alan Blinder, noting that, minus the Recovery Act and the administration of the Bush-era bank bailouts, American GDP would be 6.5 per cent lower, and the economy would be short 8.5 million jobs. The signature achievement of Orszag’s time in the spotlight, however, will be the “rapidly growing wedge of deficit reduction” that is the Affordable Care Act. As one of the most zealous and involved members of Obama’s cabinet, he helped drag health reform legislation over the finish line, and didn’t mind gloating about “the most promising set of reductions to future cost growth in history.” He also took the time to lob grenades at his most vocal detractors during the process—specifically Rep. Paul Ryan of Wisconsin, whose ideas on health-care reform, Orszag said, are “fundamentally flawed.”
While Orszag is leaving with a record of progressive change, he exits without knowing whether his ambitious long-term plans for fiscal reform will succeed. In leaving at this juncture—reportedly to spend more time on his tumultuous personal life—he is also ducking some tough battles. Still on the table: the 2012 budget, and questions of by how much and how quickly the government should aim to reduce the deficit (he recommends dropping federal debt from five per cent to four per cent of GDP); how to ensure health care does “bend the cost curve” as promised; and the conundrum du jour in Washington—whether to let the 2001 Bush tax cuts for rich Americans expire at the end of this year.
“The administration has been very clear about what we favour…which is continuation of the middle class tax cuts and allowing high income cuts to expire,” Orszag said. But from his new gig at the Council on Foreign Relations in New York, he added, “I am not going to be in a position to advise the president on this.”
That he is bowing out before other senior cabinet members—the embattled Interior and Agriculture Secretaries Ken Salazar and Tom Vilsack, overworked advisers David Axelrod and Rahm Emanuel, or the underrated Hillary Clinton—is surprising. The 40-year-old, type-A, marathoning bean-counter was the youngest, most energetic member of Obama’s cabinet—and had become a sort of mascot for the city known as “Hollywood for ugly people.” Since working as an economist in Bill Clinton’s administration, he’s charmed economic glitterati like Robert Rubin, Cass Sunstein and Joseph Stiglitz, not to mention Washington fixtures from Andrea Mitchell, MSNBC correspondent and wife of Alan Greenspan, to GQ writer Ana Marie Cox. But for all the fan-girl accolades (See: Orszagasm.com) and attention lavished on his personal life (See: fall nuptials with ABC correspondent Bianna Golodryga), it seems the shrill climate of Washington overwhelmed his sense of progress.
“It’s not quite punting,” said Gale, the Brookings host, but “everyone who wants to be a philosopher-king is frustrated by government.” He wasn’t specifically referring to his friend and former colleague, but Orszag’s four years between Capitol Hill and in the White House left him well acquainted with the gap between smart policy and actual lawmaking. One need only look at the state of reform for unnecessary agricultural subsidies, or the lockstep funding of national security programs now known to be wildly inefficient, for a taste of the frustrations Orszag faced in Washington.
The problem, it seems, is management—also, as the “M” suggests, part of Orszag’s mandate. “Two-thirds of Americans believe that when something is run by government it is inefficient and wasteful,” he said, citing a study from the Pew centre. “And they are right… In too many examples, the government spends money not out of need but out of inertia.” He made a spirited effort to weed out waste, fraud and redundancy with small-ball cuts to the federal budget–and by getting out of town before Washington begins to squabble over its social needs and looming debts, he showed his own allergy to inertia. “As with many things in life,” he said, “it is all in the timing.”
Dayo Olopade is a political reporter for The Daily Beast and a Bernard Schwartz Fellow at the New America Foundation. This post originally appeared at the Daily Beast and is republished here with permission.
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