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Greasing the Skids for Kennedy Care

One Troubling Implication of an Otherwise Solid Appointment

National Journal reports that Barack Obama has selected CBO Director Peter Orszag to head up the Office of Management and Budget. Orszag is widely respected on both sides of the aisle for his professionalism and his command of budgetary detail. He’s almost certainly more supportive of expanded government than the typical Red State reader, but at least he’s likely to be a straight shooter. His appointment also suggests that one of Barack Obama’s priorities as president will be controlling health care costs, which Orszag has consistently identified as essential to getting the government’s fiscal house in order.

From Orszag’s blog:

Although it may not seem immediately relevant given our current difficulties, it will be crucial to address the nation’s looming fiscal gap — which is driven primarily by rising health care costs — as the economy eventually recovers from this current downturn. Indeed, our ability to address our current economic difficulties (through both financial market interventions and potential additional fiscal stimulus) would be severely impaired if investors were not so willing to invest substantial sums in Treasury securities without charging much higher interest rates. That willingness reflects the (currently accurate) view among investors that Treasury securities are extremely safe investments.

If we fail to put the nation on a sounder fiscal course over the next few decades, though, we will ultimately reach a point where investors would lose confidence and no longer be as willing to purchase Treasury debt at anything but exorbitant interest rates. If that were to occur, we would lack the kind of maneuvering room that we currently enjoy to address problems in the financial markets and the economy. So if you think the current economic crisis is serious, and it is, imagine what it would be like if we didn’t have the ability to undertake aggressive and innovative policy interventions because creditors were effectively unwilling to lend substantial additional sums to the Federal government…

Orszag’s comment suggests that addressing long-term health care costs may be a lesser priority for him than the current fiscal crisis. But multiple reports suggest that leading Democratic Senators will make health care one of the first issues taken up in the Obama presidency. And the Washington Post reported several days ago that the CBO, under Orszag’s direction, is preparing a report on cost-saving health care measures. And that report is attracting the interest of one of the last liberal lions:

Aides have refused to indicate what direction Kennedy will pursue but have made it clear he does not intend to cede his longtime leadership role on health policy. They expect to get valuable assistance next month when Peter Orszag, head of the independent Congressional Budget Office, releases a two-volume report on the need for health reform and a set of policy actions that could achieve measurable savings.

Orszag’s pet issue is controlling health care costs; his work is being cited by Kennedy aides as they prepare to introduce Kennedy’s health care reform blueprint. Kennedy is the Senate’s most influential Democrat on health care. Does all this mean that Obama will support Kennedy’s approach?

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