Budget Chief Peter Orszag: Obama's 'Super-Nerd'

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Peter Orszag, director of the Office of Management and Budget, is affectionately known around the White House as President Obama's "super-nerd."

He is a rare breed in Washington: a man known for skills at number-crunching and policy-writing, but also public relations.

Orzsag came to the OMB post from the nonpartisan Congressional Budget Office. In his two years there, he came to believe that the way to get the federal budget under control in the long term was to stop health care costs from rising so dramatically. He issued papers and analyses. He gave lectures and speeches about the economics of health care. And last fall, in recognition of this work, Orszag was admitted to the National Academy of Sciences' Institute of Medicine. He's one of the youngest members and one of the few who is not a physician.

Passion For Health Care Reform

Health care was one of the first topics that came up between Orszag and Obama as they discussed Orszag's potential move to OMB.

"I mean clearly, he's the president, and as we move down the road of actually getting legislation enacted this year, he's going to be making the final calls and making decisions," Orszag says. "But in terms of the direction and capturing the opportunities, he seems to be very much in the same space, which is why I was so enthusiastic about moving over to OMB."

Through his work at the Congressional Budget Office, Orszag also built strong relationships in Congress on both sides of the aisle.

Rep. Mark Kirk (R-IL) says of Orszag, "The No. 1 qualification for a budget chief is command of details. And he has that in spades. This is a man who doesn't just read a spreadsheet, he lives a spreadsheet."

And Democrats say Orszag is analytically honest and has a passion for extending health care to all Americans.

Factoring In Human Behavior

Orszag thinks that economics and medicine are both beginning to take into account a factor that had been left out of scientific models for years: human behavior.

"Too many academic fields have tried to apply pure mathematical models to activities that involve human beings. And whenever that happens — whether it's in economics or health care or medical science — whenever human beings are involved, an approach that is attracted by that purity will lead you astray," Orszag says.

Orszag has a doctorate from the London School of Economics, but says he feels like he was somewhat mistrained as a pure economist. Now, real life is teaching him some lessons. He says that people are not likely to do anything that's hard, such as saving money or taking care of one's health — no matter how good the incentives are.

Regardless of the data, psychology matters. Orszag has employed this knowledge while training for a marathon.

"If I didn't achieve what I wanted to, a very large contribution would automatically come out of my credit card and go to a charity that I very much didn't support," Orszag says of his training strategy. "So that was a very strong motivation, as I was running through mile 15 or 16 or whatever it was, to remind myself that I really didn't want to give the satisfaction to that charity for the contribution."

He declines to name the charity.

Combining Caring And Economics

Orszag says a new health care system could use psychology to figure out ways to give better medical care, not just more health care. That's what he really wants to do: combine caring for people with good economic decisions.

"That combination is embodied in a lot of what behavioral economics does, and I think it's embodied in a lot of what the Obama administration is standing for, and I think that may be one reason why I was so enthusiastic about joining the administration," Orszag says.

That philosophy dovetails with something a mentor taught Orszag early in his career: a great social economist should have a hard head and a soft heart.



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