OMB chief warns of looming federal deficits
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There was no mention of the T-word (taxes), but Office of Management and Budget Director Peter R. Orszag did raise the O-word, as in options -- to deal with rising deficits, the next major Obama headache.
Speaking today at New York University, Orszag noted that frugality and ending waste were important weapons in fighting deficits projected to hit $9 trillion in the next 10 years. But more would be needed.
“These are all important steps to reining in waste and creating a government that uses taxpayer dollars more effectively and efficiently,” Orszag said of belt-tghtening. “But these steps alone will not fill the shortfall that we face.
“That is why the president and his economic team are busy working on a range of options as we prepare for the fiscal year 2011 budget to be released in February,” Orszag said.
In his speech, Orszag raised the issue that will likely dominate 2010 and its midterm congressional elections. Economists across the political spectrum agree that the deficit is a major problem. “Deficits of this size are serious,” Orszag said, “and ultimately unsustainable.”
Politically, Republicans have argued that the deficit issue overshadows all others including healthcare reform, now working its way through Congress. President Obama has insisted that whatever version of healthcare that is finally passed must be revenue neutral, that is, not adding to the federal deficits already projected.
But Obama pledged during the campaign not to raise taxes on the middle class, though he has left the door open for taxing those earning more than $250,000 a year. Whether Obama will seek some taxes, sure to be a tough lift in an election year, to plug the fiscal holes has been a subject of Washington speculation.
Orszag gave no specifics on what options are being considered. But expect spending and taxation to come back in full force in the next year.
--Michael Muskal
Follow on Twitter @LATimesmuskal
Justin Lane / European Pressphoto Agency
