I’m just off a conference call where OMB Director Peter Orszag was going over the highlights of President Obama’s 10 year budget projections. I’m well known to be a fan of Dr. Orszag’s work: he is tough, honest, sharp, and conscientious. He dramatically improved CBO while he was there, and with OMB he has delivered the first honest budget that DC has seen in almost a decade. There are no magic wedges, where there is uncertainty, it is labeled, dollars are spent only once, and positive effects are estimated at values in line with mid-line projects. There are no massive economic upturns predicted to improve revenue projections. One can argue with the philosophy of this budget project, or with its priorities, but it is, at least, a document that does not insult the intelligence of people reading it, and is internally coherent on its own terms.
The headline steps included rolling almost everything back into the budget – putting an end to the fiction that Iraq and Afghanistan are not part of the budget – higher taxes on the wealthy, both by limiting deductions, and by allowing Bush changes to expire – and the introduction of a carbon regime. Also included are decreases in farm subsidies on those earning more than $500,000, ending the ability of sheltering foreign income, and a "economic substance" doctrine to address tax shelters.
The less heralded—but, to Dr. Orszag, equally important—goal is to streamline. "Make things easier," was a phrase that he repeated several times. Some examples he listed was a payroll deduction 401k for virtually all workers as an opt out, rather than opt in, and reducing the complexity of the Pell Grant system.
Orszag pointed to health care as the single largest driver of fiscal problems. He found "credible" Dartmouth’s study that showed as much as 30% of all health care delivery in the US does not improve outcomes. He believes that there will be other rounds of health care change, with the short term being deficit neutral, and in the long term being a significant savings. He believes that Congress will have to do the legislative work, with the President "putting money on the table to get the discussion started." He believes that the budget is in a "more dire" situation than it was even a few months ago. Rather than scaling back plans, Dr. Orszag believes that the plans have become more aggressive since the campaign.
The other headlines are in what is not touched: military spending is largely sacrosanct, other than war funding, which is expected to decrease. For this reason, it projects very large deficits for the remainder of President Obama’s term in office. It is an outline that, however, wrings the smoke and mirrors out of the budget process, and forces any political debate to proceed from the actual revenues, outlays, and expectations facing the government.
Update: OMB has just relaunched their website. . . change you can
believe in click on.