Incoming OMB Director Peter Orszag took some flak at his confirmation hearing today, most notably from Senator Bill Nelson (D-FL). But while the continuing criticism of Obama's economic plan will make the headlines, Orszag might also need to answer some more questions about the damage he seems to expect Obama to do to the economy.
Until a few weeks ago, Peter Orszag was the Director of the Congressional Budget Office. Last week, the CBO released its monthly projections for future deficits. According to the CBO, the total budget deficit will be about $2 trillion in the next 2 years (not counting the effects of Obama's stimulus package), and then it will fall to about $250 billion by 2012. CBO's best guess is that it will remain in that range through 2018, when it will drop below $200 billion:
Since Orszag was the Director of the CBO until recently -- and since these data are recent enough to take into account all we know about the current downturn -- it would not be surprising if Orszag's projections closely mirrored those of the CBO. In fact, since Orszag is at liberty to project how these numbers will be improved by Obama's policies (something CBO's projections cannot do), we would expect that Orszag's numbers would be better than those of the CBO.
Instead, they are dramatically worse:
Peter Orszag, designated by Obama to run the Office of Management and Budget, told the Senate Budget Committee to expect budget deficits equaling 5 percent of the size of the economy for the next five or ten years.That would mean deficits of $750 billion or so over the next couple of years and steadily exceeding $1 trillion by the end of the next decade.
So while the CBO projects that current policies will yield deficits of roughly 1 percent of GDP by 2019, Orszag anticipates they will be 5 times higher. And that's after Obama scrubs the federal budget line by line to cut our waste, after he restores economic growth, after he introduces extraordinary new efficiencies to health care, after he restores the solvency of our entitlement programs, and after he fixes the educational system and America's crumbling infrastructure.
In other words, once Obama has delivered us a better world, the budget will look far, far worse than we think possible today.
There are only a few possible explanations. The first is that Obama genuinely thinks his agenda is terrible for America (possible, but very unlikely). The second is that either his economic team or the CBO is completely incompetent (also unlikely). The third possibility -- and the only one that really makes sense -- is that Obama is intentionally painting a doomsday scenario here -- either to pave the way for huge tax increases, or to make himself look like a miracle worker even if things get much worse from here on out.
Hopefully Orszag, Larry Summers, Christina Romer, and the rest of the economic team is asked whether they're playing fast and loose with the data, or whether they really believe Obama has a plan to destroy our economy.