Orszag's Column Points To Odd-Man-Out Status At White House
Former Obama adviser Peter Orszag's inaugural guest column in Monday's New York Times illustrates the extent to which the White House has been able to successfully keep hidden even basic internal disagreements over political strategy and economic policy.
On the question of extending the Bush tax cuts for everyone except the rich, the former director of the Office of Management and Budget touts what he called a "compromise" approach.
"[E]xtend the tax cuts for two years and then end them altogether," he writes. "Ideally only the middle-class tax cuts would be continued for now. Getting a deal in Congress, though, may require keeping the high-income tax cuts, too. And that would still be worth it."
On the surface, Orszag's proposal seems to be just an incremental give-away. Because the Senate may not pass only a partial extension of the tax cuts, better to cut a temporary deal, provide some continued relief, and firmly commit to letting those cuts expire in more prosperous times.
But within the White House, many believe that to make even a small compromise on the Bush tax cuts (whether on political or economic grounds) is to give the store away. Last month, for instance, the Vice President's chief economic adviser Jared Bernstein sat down with the Huffington Post for an off-the-record discussion on a host of economic matters. The one thing that he and his office allowed to be printed was a relatively uncompromising take on why a temporary extension of the Bush tax cuts for the wealthy simply won't work.
"There are many good reasons not to extend the high-end parts of the Bush tax cuts having to do with the fear that a temporary extension could be made permanent," Bernstein said. "What you are talking about -- a $30 to 40 billion range in terms of adding to the deficit by extending the high end -- could easily become $700 billion over a ten-year budget window."
It was also fairly noteworthy that just hours after Orszag's New York Times column went live, the White House formally pushed back on the compromise suggestion.
"The president has been clear about his support for extending tax cuts for the middle class and about ending the tax cuts for the wealthiest 2 percent of Americans, which would cost 700 billion over ten years to extend at a time when we are dealing with a fiscal crisis and the independent CBO has listed as the least effective form of growing the economy," said spokesperson Jen Psaki.
White House aides have been relatively mum about whether Orszag privately argued for a temporary extension of Bush tax cuts for the wealthy while still in the administration. But the fact that, immediately upon leaving, he made this argument suggests as much.
Increasingly, there have been whispers within the White House and among the cadre of economic advisers that deal closely with the administration that Orszag was a voice at odds with his colleagues. One Democratic figure who requested anonymity to talk about his personal dealings with White House officials said it was "totally outrageous" that Orszag had earned the reputation of being a progressive voice on economic matters -- a perception largely earned by his fierce advocacy for health care reform as a means of changing the country's fiscal trajectory. "He never was," the official said.
"I find it astonishing that a deficit hawks like Peter, who was opposed to further stimulus and initiated the freeze on domestic spending, now he worries about the jobs impact of raising taxes on the high end," said Lawrence Mishel, President of the progressive-leaning Economic Policy Institute. "Give me a break. Sorry, I can't see endorsing the notion that having the rich pay more taxes is a harsh thing for the recovery, especially coming from someone I feel has been relatively indifferent to the need for further stimulus."
Back when Christina Romer resigned from her post as chair of the Council of Economic Advisers, meanwhile, the conventional wisdom was that her arguments with chief adviser Larry Summers were to blame. But in a telling bit of pushback that wasn't disputed within administration circles, an economic adviser who worked closely with Romer, Summers and Orszag said that the "balance of power on the economic team" actually "changed with Peter Orszag's departure.
"He was the main antagonist of Summers' and Romer's in advocating a stop to measures supporting discretionary spending," the adviser said, requesting anonymity. "Summers and Romer were actually closely aligned on macro-economic policy."
There is in the end little remarkable about the fact that these differences on economic policy took 18 months to begin making their way into public. If anything, Obama's operations are known for their tight message control. But, as with Romer's departure speech, in which she advocated for a strong commitment to government spending, it will be fascinating to watch how the White House -- already under siege due to the economic policies it's chosen -- handles the second guessing that comes from former aides.