Well, this is the next in my series on the Obama budget, which I figure is going to be the major political topic of discussion for weeks to come.
On Sunday, Peter Orzag, Director of the Office of Management and Budget, was interviewed by George Stephanopoulos on This Week on ABC. It was not a stellar performance. First, Orzag did not seem confident in his answers, and frankly gave no reason for the business community to have any faith in him. And the gimmicks to hide the real cost of the budget are astounding.
He did have some interesting insights to Obama’s approach to the budget. First, Stephanopoulos asked Orzag if the budget projections are realistic. The Obama Administration has assumed that from now through 2013 (the rest of Obama’s term), that the GDP will grow on average by 3% yearly. It seems that they are the outlier. I mean, how do they expect that kind of growth when you have people like Jim Cramer of CNBC calling Obama the most destructive Presidency to the free market ever?
Most private estimates are predicting no more than an average of 2%. And Timothy Geithner, Obama’s Treasury Secretary, himself is using 1% as the baseline as he is ‘stress testing’ the banks. Orzag had no answer for this. When asked if the deficit-reduction targets remained on track, Orzag said, “I think so. The deficit reduction doesn’t just come from the economy recovering. And by 2013 or 2014, let’s all hope that the economy is back on its feet.” Not exactly a pillar of confidence.
Second, Orzag was asked about his claim to be saving $2 Trillion during Obama’s first term. This is a farce. Basically, the only way you can get to that number is if the Iraq and Afghanistan wars were funded as they were in 2008, and that funding was stable through 2013. Even Bush did not plan that. Additionally, this adds in costs of the Bush tax cuts after they expire. How does that make sense? So the real savings, assuming Iraq will be toned down and Afghanistan will continue and the Bush tax cuts expire on time, is much closer to $300 billion, and that still presumes the 3% growth rate spoken of above.
Stephanopoulos then asked him about taxes. He directly asked Orzag if he really believed that there would be no taxes on those making less than $250,000. Orzag said yes. When pressed however, he wavered. This was especially true when confronted on the cap and trade system Obama is planning for carbon emissions. Orzag basically admitted that the middle class WOULD BE TAXED. I thought this was a major concession. But Orzag argued that the middle class would also get benefits from the stimulus (he specifically mention the tax cut, Pell grants, etc.), and that overall he felt that the middle class would pay less taxes. Of course, that was not what Stephanopoulos asked.
Finally, he was asked about Obama’s promise to ban earmarks. The current Omnibus bill to fund the government has 9,000 or so earmarks. Orzag basically rescinded Obama’s promise all together, saying that Obama would not fight the Democrat leaders of Congress on earmarks regarding this bill. Not only that, but the Democratic Congress is fighting back; Democratic whip Steny Hoyer stated that the White House has no right to dictate to the Congress on whether or not they use earmarks. So much for the era of responsibility; an absolute broken promise.
So, to conclude, Orzag either confirmed or did not deny the following:
- Tax increase on the middle class
- No ban on earmarks from Obama.
- GDP predictions in the budget are a best case scenario.
Orzag did little in this interview for anyone to have confidence in him.