Morgen on May 7, 2009 at 9:05 pm
Today the White House rolled out the full details of their $3.6 trillion budget plan for fiscal year 2010. Of course only in the Orwellian world we now seem to be living in would a budget plan with an expected deficit as high as $1.5 trillion be branded as a “New Era of Responsibility“. In predictable fashion, the White House attempted to put the focus on a $17B package of supposed budget “cuts”, many of which aren’t even expected to survive the actual appropriations process in Congress. And of course $17B is small change compared to the near across the board increases in discretionary spending defined throughout the budget.
Which brings us to the key emissary of the Obama budget plan, Peter Orszag, the Director of the Office of Management and Budget (OMB). Prior to his OMB appointment by Obama, Orszag was the Director of the Congressional Budget Office (CBO) where he was widely regarded – and respected – as a budget deficit hawk. Judging by his spin on the budget plan released today, Orszag apparently has deluded himself into believing that this is still the case. For the benefit of Mr. Orszag, and all the other budget Kool-Aid drinkers, let’s take a little walk down memory lane and see what Orszag had to say about an expected $400B (!) deficit under George Bush in 2004:
The danger Orszag was warning about in 2004 was the role that government budget deficits play in reducing national savings, and crowding out investment and production within the private sector. A point he just as easily could – and should – be making today. In fact, with the 2010 deficit expected to be almost 400% higher than in 2004, he should be shouting it from the rooftops! But of course the Obama Administration does not care about the private sector, and so instead we get a dog and pony show touting fictitious budgets cuts and phony platitudes about responsibility.
Over the past couple of months I’ve reviewed a lot of Orszag’s congressional testimony from his days running the CBO, as well as research he published in a previous role at the Brookings Institution. While it’s apparent to me that Orszag is a liberal at heart, I believe he is also a very good economist. I hold out a faint degree of hope that he will come around in the next year or two and see the fiscal catastrophe that the Obama Administration is inflecting on future generations of Americans. I just hope he puts down the Kool-Aid before it’s too late.