Orszag Eyes Swift Spending Of Stimulus Funds
MICHELE NORRIS, host:
Well, today the president's budget director urged passage of a bill with the authorization to spend most of the money very quickly. Peter Orszag sent a letter to the House Appropriations chairman and says 75 percent of the $825 billion stimulus package should be spent in the next year and a half. Peter Orszag joins us now. Thanks so much for being with us.
Dr. PETER ORSZAG (Director, White House Office of Management and Budget): Thanks for having me.
NORRIS: Now, David Camp just told us that tax breaks are a much more efficient way to stimulate the economy. And a lot of economists and even the Congressional Budget Office seem to agree. What do you say to that?
Dr. ORSZAG: Yes and no. If you look at the Congressional Budget Office testimony that was released today, it said that in terms of bang for the buck, so in terms of how much kick you get from a dollar of budget costs, direct spending, like investing in roads and schools and other - the electricity grid is actually more effective than tax revisions. I think the tension is that some of that stuff spends out somewhat slower, and so a balance in which you have both direct spending and tax revisions gives you the ideal mix of high bang for the buck provisions and faster acting provisions which typically don't have as high a bang for the buck.
NORRIS: When you ran the Congressional Budget Office, this is what the office had to say about public works spending intended to stimulate the economy. It was in a 2008 report. It said large scale construction projects of any type require years of planning and preparation, even those that are, quote, "on the shelf" generally cannot be undertaken quickly enough to provide timely stimulus to the economy. Isn't that the basic argument that Republicans are using to push back against the proposal?
Dr. ORSZAG: I think that's right during a normal period of normal economic downturn. We are facing the worst economic downturn or crisis since the Great Depression. It's expected to last for a significant period of time. If this were a very short-lived recession, the normal concern about getting infrastructure projects out the door quickly would be salient, and that's what motivated the quotation you just read. That was a different context in which the depth and severity of the economic crisis that we're facing I think was less apparent.
When you are facing something that's both a deep economic downturn and one that's expected to last for a significant amount of time, the fact that something doesn't spend out immediately over, say, two or three months, is much less of a concern, especially if the bulk of it can spend out over a year and a half or so.
NORRIS: With all the spending that this administration is building up, it seems like you are heading toward a very large deficit. Will you be able to avoid some sort of tax increase midway through Barack Obama's first term or perhaps into the next presidential term?
Dr. ORSZAG: Look, we as a nation face a very serious medium and long-term fiscal problem. We are inheriting deficits that are likely to be a trillion dollars or more, as far as the eye can see. And the president's budget that will be released in about a month will put forward specific ideas for getting that number down as we emerge from the current economic downturn. So we have the need to address the current downturn by jumpstarting the economy, and that will necessarily mean some increase in the deficit even beyond the large deficit that we're inheriting. And then it's our responsibility and the nation's responsibility to come together and bring the out-year deficits down, which will involve many painful choices and we need to keep everything on the table.
NORRIS: What kind of painful choices?
Dr. ORSZAG: Well, the key to our long-term fiscal future is actually improving the efficiency of the health care system, and I think there's a lot that can be done there to bring - to bend the curve on health care costs. If we do that, we will put the nation on a much different fiscal trajectory. And if we don't, we will face large and growing deficits over time that will become unsustainable.
NORRIS: Thank you so much for speaking to us. It was good to talk to you.
Dr. ORSZAG: Thank you very much.
NORRIS: Peter Orszag is the Director of the Office of Management and Budget. He joined us from his office in the Eisenhower Executive Office Building adjacent to the White House.