Easy confirmation expected for OMB nominee Orszag

McClatchy NewspapersJanuary 13, 2009 

WASHINGTON — President-elect Barack Obama's budget spokesman said Tuesday that the nation faces "the worst economic crisis since the Great Depression" and without a tough stimulus package it could lose another 3 million to 4 million jobs this year.

"The short-term economic outlook we are inheriting at the beginning of 2009 is bleak, and dramatic action is necessary to address it,' said Peter Orszag, whom Obama nominated as the director of the Office of Management and Budget.

Orszag testified before the Senate Budget Committee, where members know him well from his two years as the director of the Congressional Budget Office.

Easy confirmation is expected. "I'm not sure why we're having this hearing," said Sen. Judd Gregg of New Hampshire, the top Republican on the committee.

Sen. Jeff Sessions, R-Ala., warned Orszag that he's going to have to become "Doctor No," and Orszag said he'd be comfortable with the role.

"Being nice probably helps," Sessions said.

Orszag will be one of the federal budget's chief Capitol Hill salesmen, and tensions are growing about how best to stimulate the economy. Obama was due to visit the Senate Democrats' weekly policy luncheon Tuesday to gauge support for different provisions.

Members of Congress are particularly concerned about the size and specifics of tax cuts, with many Democrats saying that they're wary of reducing the amounts withheld from many workers' paychecks, as Obama has suggested.

There's also sentiment for more tax breaks for alternative energy development, and individual members want pet spending projects.

Orszag tried to keep his comments on a higher plane, attempting to convince members that the urgency for action is so great that they shouldn't get mired in stubborn disputes. Members were sympathetic.

"We are building a wall of debt," lamented committee Chairman Kent Conrad, D-N.D.

Orszag said Obama would offer a budget review in mid-to late February that would address deficit and budget issues more fully. The CBO estimates that the fiscal 2009 deficit — before any policy changes — is $1.2 trillion, far higher than ever.

Last year's deficit was $455 billion, and it was $161 billion in 2007.

Orszag defended big deficits: "Even with the prospect of such large deficits, nearly every leading economist agrees we have no choice but to act aggressively to expand aggregate demand and address the macroeconomic crisis.

"That will necessarily imply even larger deficits in the near term."

He got little argument from senators, though Gregg was concerned that additional infrastructure spending, a key part of Obama's plan, be tightly defined so that it wouldn't encourage out-of-control spending.

"I know in my state every community's got their list," Gregg said, and it includes such projects as new fire alarms at a town hall.

"This is not where we get our return," he said.

Orszag was sympathetic, and kept his eye on the larger picture.

"Unless we take action, unemployment will rise to over 9 percent and will return only very gradually to its pre-recession level," he said. That rate, he predicted, would prevail throughout much of 2010.

The December jobless rate was 7.2 percent — its highest monthly level in 16 years — and since August, 1.93 million jobs have been lost

With a strong stimulus, Orszag said, the rate should dip below 8 percent in the first quarter of next year and below 6 percent in mid-2012.

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