White House budget chief says Obama not over-reaching with spending plan

J. Scott Applewhite/AP
Peter Orszag, director of the White House Office of Management and Budget, appeared before the Senate Budget Committee last week.

Is President Obama trying to do too much with his budget? That's what some critics in Congress think. They say that given the current economic crisis, now is not the time to start an expensive overhaul of the nation's healthcare system, or propose a far-reaching cap-and-trade program aimed at reducing US greenhouse-gas emissions.

To this, administration officials have a two-word answer: That's wrong."The risks of not acting are substantial," said Office of Management and Budget director Peter Orszag at a Monitor lunch on Tuesday.

A 'crisis' if budget doesn't deal with broad issues"

We may be sowing the seeds of future crises if we don't address these widely known and broad societal problems," he said.

To those who insist that the White House needs to focus on fixing the banking system first, Mr. Obama himself said Tuesday that his team is working hard to get credit flowing again – and that real economic recovery will take more actions than that."

The American people don't have the luxury of just focusing on Wall Street," said Obama in an appearance with the heads of the congressional budget committees. "They don't have the luxury of choosing to pay their mortgage or their medical bills. They don't get to pick between paying their kids' college tuition or saving enough money for retirement."

Congress takes up budget plan

The White House is making a big push for its $3.55 trillion fiscal 2010 budget this week as Congress begins official consideration of the plan.The House and Senate Budget panels are slated to vote on a budget resolution this week. A budget debate in the full Senate is scheduled for the week of March 30.

Getting the budget through may not be easy. Almost all Republicans have vowed to oppose it, saying that the debt it will pile up for future generations is just too big. A few moderate Democrats have voiced similar concerns.

The chairman of the Senate Budget Committee, Kent Conrad (D) of North Dakota, is among those Democrats who have been hesitant. He's called the future track of the country's deficit "unsustainable."

Country faces big deficits

The OMB's Mr. Orszag frames the budget debate in a slightly different way. He says the US faces not one, but two, trillion-dollar deficits.

The first is the gap between how much the economy could be producing and how much it is producing. That's the terrible, job-destroying chasm produced by the current downturn.

The second trillion-dollar shortfall is the US budget deficit. Obama has been clear that he wants to put the budget on a path to cut that in half by the end of his first term, said Orszag.

At the same time, Obama wants his budget to make substantial investments in healthcare, education, sustainable energy, environmental improvement, and other big issues, according to the administration's budget chief.

"I'm confident that we'll get a budget resolution that reflects that," said Orszag.

Already, there are $50 billion in savings contained in the budget from cuts in programs and improvements in governmental efficiencies, according to Orszag.

More to come on the budget

The Obama administration, which has had little time to pull together its first budget, will release a fuller effort in April, and there may be more such cuts to come.For instance, too little attention has been paid to the real property – buildings and land – the government owns, Orszag insisted.

"It could be managed much more effectively in terms of upkeep, and even when and how we decide to sell things that are no longer appropriate for agency use," said Orszag.

Long term, the biggest fiscal problem facing the nation is the rising cost of healthcare, according to Orszag. If they continue at their present rate of growth, the government health entitlement programs of Medicare and Medicaid will by themselves account for 20 percent of US gross domestic product by 2050.

Steps to rein in costs

Orszag foresees four key steps necessary to rein in these costs.One is investing in information technology. Another is conducting comparative effectiveness research to determine how to get the most treatment bang for the buck.

The third step would be modernizing Medicare and Medicaid payment systems, and the fourth would be promoting health-problem prevention and wellness programs."

The single most important thing we can do to put the nation on a sounder long-term fiscal footing is to reduce the rate of growth of healthcare costs. Period," said Orszag at the Monitor lunch.

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