Orszag Backs Bush Tax Cuts Extension

Former Director of the Office of Management and Budget Peter Orzag said Tuesday that Congress should work towards extending the Bush tax cuts for two years, at which point he said they end, permanently.

In his first New York Times column, Orszag said he believes the best way to handle the country’s short term jobs problem and a growing deficit for the long term is to temporarily extend the tax cuts set to expire this year.

“In the face of the dueling deficits, the best approach is a compromise: extend the tax cuts for two years and then end them altogether,” Orzag wrote.

The former OMB Director also said he believes that higher taxes would reduce consumer spending, severely affecting the demand for products across the boards. While permanently extending these tax cuts would increase the deficit by nearly $3 trillion over the next ten years, Orszag argued that the tax cuts are simply not affordable and, by letting them expire, an already stalled jobs market will be dealt a heavy blow, worsening its status.

Orszag said this is not a time for partisan politics, but rather a time where Congress and the administration need to work together to solve the “One Nation, Two Deficits” problem facing the country.

“Both approaches lock us into a budget scenario out of which there are few politically plausible routes of escape,” Orszag said. “Senate Democrats and Republicans almost never come together anymore, [and] this month, they should fight the dual deficits rather than each other. Let’s continue the tax cuts for two years but end them for good in 2013.”

OMB Director Says More Must Be Done For Long-Term Deficit Reduction

By Benny Martinez - University of New Mexico/Talk Radio News Service

U.S. Office of Management and Budget (OMB) Director Peter Orszag said Thursday that the steps currently being taken to reduce the national deficit, although effective, are not enough.

The 2001 and 2003 tax cuts to those who have an income of $250,000 or more will expire as scheduled, Orszag said. In the coming decade, this will reduce the deficit by nearly $700 billion.

Transitioning to a clean energy future by eliminating fossil fuel subsidies delivered through the tax code will reduce the deficit by about $40 billion in the next ten years.


And the three-year freeze of non-security discretionary spending will further reduce the deficit an additional $250 billion, solidifying a $1.2 trillion reduction in national deficits.

“Even with that $1.2 trillion in deficit reduction, the deficit remains higher than we’d like it to be,” Orszag said. “[This] is why we are calling for the creation of a bipartisan fiscal commission to put forward recommendations to get us the rest of the way to a stable debt trajectory.”

Orszag added that this would involve overall deficits of roughly 3 percent of the economy by 2015.

According to Orszag, deficit reduction is evident in the coming decade but he remains skeptical about the long-term fiscal challenge, saying that the root cause of the country’s deficit is the rate at which health care costs are growing.

“We are eager to continue to work with Congress to finally enact comprehensive health reform legislation, Orszag said. “[This] helps to reduce the deficit, not only over this decade, but equally important, puts in place the infrastructure that will allow us to decrease deficit by increasing amounts thereafter.”

Spending Freeze Will Only Affect Some Programs, Says White House Official

By Benny Martinez - University of New Mexico/Talk Radio News Service

Not everyone will feel the wrath of President Barack Obama’s three-year spending freeze, said Rob Nabors, Deputy Director of the White House's Office of Management and Budget.

“When we talk about the freeze, this is not an across the board cut,” Nabors said Tuesday during a conference call with reporters.

Nabors said that only the programs that have stalled, are not achieving their mission and those of lower priority will be subject to the President’s proposed freeze.

“We made a series of decisions where some programs are actually getting increases, some programs are getting decreased,” he said. “We’re looking at programs individually.”

When asked if Congress will be able to tackle a job creation bill in the nine months before the freeze takes effect at the beginning of FY2011 in October, Nabors responded, “yes, we will be able to put people back to work and make sure that the economy is growing.”

Dog the blue dog

By Michael Ruhl, University of New Mexico – Talk Radio News Service

Grassroots advocacy groups are launching an offensive against conservative Democrats in Congress who are opposing President Obama’s legislation. Campaign for America’s Future has launched a program called “Dog the Blue Dogs”, which is aimed at persuading members of the Blue Dog Coalition into voting for President Obama’s legislation. The Blue Dog Coalition is a group of moderate and conservative Democrats in the House of Representatives.

Bob Borosage, President of Campaign for America’s Future, said that several Blue Dog Democrats are conspiring with the Republicans to be obstructionists of the president’s agenda, and are partnering with the likes of talk show host Rush Limbaugh to try to make Obama fail all together. The response from Borosage and groups like USAction is going to be a ground offensive against these Democratic members of Congress. The plan is to run ads in each member’s home district, informing the constituents of how their congressional representatives voted against the President. Borosage said that the campaign is about educating the public, not partisanship.

Senator Evan Bayh (D-Ind.) has been painted with a target for his position on the president’s budget. William McNary, President of USAction and part of Unity 09, said that his organization was going to be mobilizing grassroots efforts in Bayh’s home state of Indiana during the upcoming congressional recess, but could not elaborate on what specific strategies would be used. McNary said that if Senator Bayh wants some specific changes made to the Obama budget, he should express that in a clear and articulate manner, instead of simply voting against the bill.

McNary said that the public should not let members of Congress get “cold feet” about change. Borosage believes this reluctance by some members is because of the power of entrenched interests, rather than individual political stances. He continued that these legislators must “be heard by their constituents, not just their contributors”.

Borosage denied planning this with any of the Congressional Leadership, and said that White House Chief of Staff Rahm Emmanuel was also not involved.

Senate Budget Committee Critiques President's Budget Proposal

In a heated exchange, the Senate Budget Committee heard testimony from OMB director Jim Nussle regarding President Bush’s FY2009 Budget Proposal. Chariman Kent Conrad (D-ND) opened the hearing with a poster reading “the debt is the threat” and continued this theme, saying the “debt is going up like a scalded cat,” described the three D’s of President Bush’s legacy as “debt, deficit, and decline,” and called the budget “a debt bomb on the next president.” He made sure to emphasize the difference between the deficit, which is the year-to-year difference between spending and revenue, and the debt, which includes all money owed to Social Security and other lenders.

The consensus was apparent that this budget is unrealistic on a number of levels. A number of social programs would face spending cuts of up to 100%, the DOD would receive less than half of the $193 billion it spent this year in Iraq and Afghanistan.

While each side of the aisle presented different complaints, they were united in opposition to the projected economic outlook if this plan is put into action. The $9 trillion debt is expected to reach $10 trillion; if the stimulus package is enacted, the 2008 deficit is expected to reach $400 billion. Ranking member Judd Gregg (R-NH) criticized the Democrats regarding Pay-Go rules and SCHIP, but gave Nussle the same treatment, criticizing the long-run usefulness of this plan.

Chairman Conrad and Senator Bernard Sanders (I-VT) were some of the most vocal and aggressive when demanding justifications for unrealistically low war spending estimates ($70 billion for 2009) and severe cuts to social programs like LIHEAP which helps low-income families heat their homes. Nussle responded with a question, asking when Congress would pay the war bills for this year.

Medicare and Medicaid was also a topic of long discussion. Nussle claimed the budget aims to limit uncontrolled growth in spending in these areas. The Committee discussed the need for reform in these areas, rather than simple spending cuts.

Senator Lautenberg (D-NJ) focused on the cuts that Amtrak would receive under the President’s plan, remarking on traffic problems across the country.

Senator Menedez (D-NJ) seemed to sum it all up when he declared the proposal “dead on arrival.”