peter orszag

Assuring everyone that they're unwilling to listen to economic reason, even from the man employed as their budget director a month ago, the White House spokespeople were sent forth this morning to refute the former OMB director's inaugural New York Times column.

In the column, Orszag called for a two-year extension of the Bush tax cuts, at which point they would end, completely. The message is at odds with the White House's contention that Congress should raise taxes on higher income brackets, extending only cuts for the middle class. Orszag echoes conservative concerns about Obama's preference, saying a hike could make an "already stagnating jobs market worse over the next year or two."

Higher taxes now would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt.

He goes on to say that "revenue" (read: taxes) must be part of the equation when solving our long-term budget problem and lambast conservatives for wanting to cut taxes, which would affect the deficit. But those parts aren't getting much attention.

The administration responds:

White House aides were quick to make clear that Orzsag's advice will not change the president's view that the tax cuts for the rich need to expire at the end of the year in the name of fiscal discipline.

"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 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 (Congressional Budget Office) has listed as the least effective form of growing the economy," White House spokeswoman Amy Brundage told CNN.

And, no, I still don't think Orszag's sexy. But he's inching closer.

Even his adversaries agree that Rep. Paul Ryan's Roadmap for America's Future is a big idea: The plan reforms Social Security, Medicare and Medicaid, and the income tax. It effectively deals with the long-term fiscal crisis. The Obama budget, by contrast, projects record deficits and rising public debt long into the future.

Obama says the Republicans are always on the sidelines, but on a major issue -- preventing the fiscal reckoning that could lead to high interest rates, inflation, low growth, economy-strangling austerity plans, or all of the above -- Obama and the Democrats have little to say. To date, the president's attempt to address the entitlement problem has been restricted to his health care bill, which relied on rosy assumptions and left the "tough choices" to future Congresses and Independent Medicare Advisory Boards. And the health reform is unlikely to pass in any case. Entitlement commissions? Nonstarters. Spending freezes? They're trivial. We're back at square one.