When Peter Orszag said he was leaving his job as OMB chief a couple of weeks ago, the reporting about his exit didn’t give readers enough information to gauge what was going on with the White House economic team. Why is he leaving? Does his departure mean anything for the country’s future economic course?
The New York Times didn’t exactly answer that question. But it went a bit deeper over the holiday weekend on the White House debate over whether to push harder on economic stimulus or deficit reduction—a debate that seems to have isolated Orszag from the rest of the administration’s economic braintrust. The story names other names, too, and puts the current split in some interesting historical context, comparing it with the last time there was a similar argument:
While President Bill Clinton’s political advisers favored more spending and tax cuts coming out of the recession of the early 1990s and his economic team pushed to start reducing deficits, in President Obama’s circle the opposite is true. Political advisers are channeling the widespread public anger at deficits while the economic team argues that the government should further spur the economy to avert another recession.
It’s regrettable that the Times used that phrase, “the widespread public anger at deficits.” As Greg Marx and I have written before, it’s pretty hard to find evidence that the public is freaking out about the deficit, a point Ben Somberg made well over the weekend.
The Times got it closer to correct a bit further down, when it noted that, “Over the last few weeks, Democrats in the Senate have failed to muster enough votes to pass a new package of measures to address the economic weakness, reflecting what some of them see as the political perils of further deficit spending.”
The NYT says Obama’s advisers, and plenty of outside economists, agree that more stimulus this year, and a commitment to reduce the debt, are both needed. “The advisers’ debate is over the timing and scale of any stimulus or deficit reduction.” Here’s how the White House crowd shakes out on the question:
Those pressing for more stimulus measures include Christina Romer, the chairwoman of the Council of Economic Advisers; Jared Bernstein, economic adviser to Vice President Joseph R. Biden Jr.; and the Treasury secretary, Timothy F. Geithner, who took that message internationally to the Group of 20 summit meeting of developed nations last weekend in Canada. Lawrence H. Summers, who as director of the National Economic Council tries to broker what he calls the “brakes-versus-accelerator” debates, nonetheless makes the economic arguments for an additional stimulus, officials say.
More focused on deficits — or at least on positioning Mr. Obama to show his concern — are his chief strategist, David Axelrod, other political advisers and Rahm Emanuel, the White House chief of staff, according to Democrats. Their lone supporter among the top economic aides is Peter R. Orszag, the budget director, who will leave the administration this month.
That doesn’t explain why Orszag is giving up his gig, but it sure gives a lot more context than we had before.
It’s also interesting that, while Clinton’s economic team won the day back then— “asserting that a credible commitment to fiscal responsibility would reassure financial markets and lead to greater long-term growth,”— now it’s Obama’s political team that has the edge, “again in the cause of emphasizing deficit reduction and with an assist from Congressional Democrats nervous about the midterm elections.”
It’s a good story, and important information to keep in mind. Whenever the president picks a successor to Orszag, the press should find out where the new OMB chief fits in the debate.
— Further Reading:
Deficit Still Not Dominant: Some cold water on a Gallup poll that’s making the rounds