Era of Responsibility, Part 2.

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.

Peter Orzag, OMB Director...a deer in the headlights
Peter Orzag, OMB Director...a deer in the headlights

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.

5 thoughts on “Era of Responsibility, Part 2.

  • March 3, 2009 at 6:21 pm
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    Obama is a radical. It showed its ugly head in the campaign. It is now showing itself in his propensity to believe government is the solution to all problems big and small. Obama’s words are much like those of the old Soviet Union. Lies smothered in sugary talk in the hopes the ignorant masses will buy into it.

  • March 3, 2009 at 10:45 pm
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    Rather than indulge in criticism of officials only weeks in office, I would offer the following:

    Unregulated capitalism during the past decade has allowed corporate America to run wild with, and run off with, this nation’s collective wealth. The financial and corporate industries, inclusive, were allowed – with the complicity of our previous administration, Congress and regulating agencies – to lavish utterly indefensible compensation on executive officers and to run smoke-and-mirror financial shell games that ultimately caused the fiscal and functional collapse of the institutions these same elitist cadres so covertly and skillfully disassembled. This relatively recent personal and intentional perversion of the intent of the capitalist system has critically crippled our national and global financial systems.

    Our Capitalist/Free Market System is, obviously, based on the flow of capital within the system. This function was, up until recently, the responsibility of the institutions that received and distributed capital provided by the investing and depositing public – and it was tolerably honorable.

    When these institutions decided to surreptitiously morph their role into the primary recipients and beneficiaries of this capital, and proceeded to spend it on internal compensation and external influence to the point of bankruptcy, they failed not only as business entities, but they failed in their critical role in the capitalist mechanism for which they were intended and trusted. According to educated and credible economists – rather than bitter, defeated Radioheads, politicians and followers – failure to resurrect these institutions will eventually result in this nation’s, and the worlds, total economic collapse – and the horrific worldwide conditions that would result from such an outcome.

    Our capitalist system cannot depend on Free Market self-regulation to cure our economic pandemic when critical elements of this mechanism have been disabled – intentionally or otherwise. We cannot expect fruit from a tree when someone has dammed up the river – we’ll have to provide the water ourselves – at least for the foreseeable future.

    The infusion of tens of trillions of dollars into these failed capitalist institutions is not now optional. This nation’s taxpayers will, over the next several generations, pay dearly and deeply to refinance and reassemble these gravely fleeced institutions. This monumental and undeserved burden will almost certainly carry with it a drastic reduction in the average citizen’s standard of living.

    I would suggest that the ignorant masses are crowded around the radio calling in unison for the unconditional apology of whomever last voiced offense to the vulgar rantings of the ad hoc leader of the conservative clan.

  • March 4, 2009 at 5:50 am
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    Instead of unregulated capitalism, we are on the verge of unregulated socialism. I agree that capitalism needs to be regulated. I am not one of those that think regulations are completely abhorrent. But as usual in a crisis, politicians go to one extreme or another; Obama is doing exactly that. If it succeeds, it is an excellent for the country. I unfortunately don’t believe that, but I hope I am wrong. If it fails, we will be in much deeper debt and trouble than we are now, and Mr. Obama will be purely to blame.

  • March 4, 2009 at 11:53 am
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    Know what I resent? The fact that I had enough sense to buy a home I could afford and pay it off early, and I’m the one stuck bailing out these guys who thought they could own a $300,000 house while making $20K a year. Now my husband is laid off, and we’ll be getting none of this “stimulus” package. We’ll just be paying for it.

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