About 20 years ago, I was covering the federal budget for National Journal when I decided to write a profile of Dick Darman, then serving as director of the Office of Management and Budget (OMB) for President George H.W. Bush.
After the piece appeared, a colleague asked why I hadn’t pressed Darman on the public policy contradictions of his career – how, for instance, he could help President Reagan raise the tax rate on capital gains as part of the 1986 Tax Reform Act and then help President Bush reduce it. Well, I mused, I saw no reason to press him. Darman had worked for two different presidents with two different perspectives on the issue, and he was hired to push the agenda of whoever he was serving.
I recall the anecdote while reading this week’s coverage of Peter Orszag’s impending departure as OMB director for President Obama. The facts seemed accurate, but the analysis tended to suffer from two problems – the first (a la Darman) related to Orszag’s role as OMB director, the second to Orszag himself. (Full disclosure: during the Obama transition, I ran the confirmation process for his top picks for OMB, accompanying Orszag and others on visits with senators, preparing them for confirmation hearings, and so on.)
Problem #1: Like many top White House officials over the years, Orszag gets blamed for the actions of his boss. “Peter Orszag brought to the White House sterling credentials as a deficit foe,” the Wall Street Journal’s Jonathan Weisman wrote. “But he will leave next month with the federal budget deficit stuck above $1 trillion.” Similarly, the Journal’s editorial page sniffed, “According to press reports, Peter Orszag has told friends that he plans to leave as White House budget director because he wants to go out on ‘a high note.’ Would that refer to the deficit, or federal spending as a share of GDP?”
Good grief! Did Orszag create all that red ink and all that additional spending in the short term all by himself? Of course not. President Obama inherited a huge deficit, fueled by a built-in mismatch between taxes and spending, which was swollen considerably in the short term by a deep recession that reduced revenues and boosted spending on unemployment and other social benefits.
To be sure, Obama added to the short-term deficit by shepherding a huge stimulus through Congress – and Orszag helped him do so, playing a key role in shaping the package and selling it to lawmakers. But to tar Orszag with today’s big deficits is both to ignore fiscal history and, more importantly, to confuse Obama’s power to make decisions with Orszag’s role to advise Obama and then implement his decisions.
Problem #2: even when they don’t overstate Orszag’s power, the critics unfairly criticize the advice he provided. Yes, it’s quite fashionable to trash the stimulus bill these days, terming it wasteful and unnecessary. But the Congressional Budget Office (CBO) and such mainstream economists as Mark Zandi, founder of Moody’s economy.com, have concluded that, without it, the recession would have been deeper, unemployment higher, and the return to economic growth slower.
Orszag also played a key role in pushing health reform through Congress. The Journal seems to think it was all a con game. “… Mr. Orszag made one signature contribution – to wit, his claim that the only way to reduce entitlement spending was to create a new entitlement. Mr. Orszag’s illusion that government can ‘bend the cost curve’ enabled Democrats to nationalize more health-care spending while claiming to save money.”Well, CBO says health reform will save money over the next decade and beyond, though surely not nearly enough to address the nation’s looming budget deficits.
As for Orszag, he and plenty of other health care experts sincerely believe that universal coverage, which health reform will essentially provide, is a prerequisite for slowing health care costs. To suggest that he constructed an “illusion” to help Obama create a new entitlement is beneath his dignity – and ours.
Click here to read the previous Capital Exchange post.
Lawrence J. Haas is former Communications Director to Vice President Gore and, before that, to the White House Office of Management and Budget. He's now a public affairs consultant who writes widely about foreign and domestic affairs, including fiscal policy.