By Ceci Connolly
Washington Post Staff Writer
Wednesday, November 26, 2008
Not long ago, the men and women minding the federal budget were pure number crunchers. But in choosing Peter R. Orszag to run the Office of Management and Budget, President-elect Barack Obama indicated yesterday that the job will have a more expansive portfolio in his administration.
Orszag will take on the traditional duties of overseeing the federal budget and weighing in on economic policy, but he will also help shape new approaches on health care, education and the environment, Obama said.
"It's said that a nation's budget reflects its values and its priorities," he said. "I believe that's true. And I know that Peter will bring to his work at the OMB a set of priorities that I and the American people share."
Orszag immediately stepped down as director of the Congressional Budget Office. His selection will return him to the executive branch, where he worked in the Clinton administration before stints in the private sector and at the University of California at Berkeley, Georgetown University and the London School of Economics.
Though he is often characterized as a protege of former Treasury secretary and Citigroup board member Robert E. Rubin, Orszag's early mentors were economists Joseph Stiglitz and Alan S. Blinder, who taught Orszag at Princeton University. Blinder's book "Hard Heads, Soft Hearts: Tough-Minded Economics for a Just Society" captures Orszag's approach to public policy, according to his younger brother.
"It's very efficient, hard-headed policies, but at the same time you ensure that you are compassionate," said Jonathan Orszag, one of three brothers who are all economists.
Throughout his career, Peter Orszag, 39, has stretched beyond the math into public policy. Most recently, he has identified rising health-care costs as the "central fiscal challenge facing the country."
In mid-December, the CBO is scheduled to release a two-volume tome produced under his watch that examines ways to expand health coverage, modernize the system and squeeze out inefficiencies that could cost as much as $700 billion a year.
"One of the reasons he is so excited about OMB is that he can have a very big influence on policy and a very big influence on the issues he cares about," Jonathan Orszag said of his brother.
Peter Orszag and Rubin developed a bond after leaving the Clinton administration. In 2005, the pair created the Hamilton Project at the Brookings Institution, a research initiative aimed at fostering economic growth that extends prosperity to more people. Other members of the Obama economic team -- including Jason Furman and Lawrence H. Summers, the incoming head of the National Economic Council -- have been involved in the project.
On Capitol Hill, the reactions to Orszag bordered on bipartisan bliss. Sens. Ron Wyden (D-Ore.) and Robert F. Bennett (R-Utah) released a joint statement deeming Orszag "practically the bionic man when Congress has needed budget guidance."
Senate Budget Committee Chairman Kent Conrad (D-N.D.) described Orszag as "whip smart" with judgment beyond his years. Sen. Judd Gregg (N.H.), the ranking Republican on the committee, called Orszag a "straight-shooter" and predicted that if Obama can "keep his people in line," it should be possible to enact budget cuts next year.
Orszag's prognosticating has sometimes fallen short.
In September, he told a group of reporters that "the risk of recession is clearly elevated, but the most likely scenario appears to be one in which economic growth continues."
Six years ago, he co-wrote a paper that projected a generally upbeat future for mortgage giants Fannie Mae and Freddie Mac. However, the paper offered one caveat: The government-sponsored mortgage associations "would likely require government assistance only in a severe housing market downturn."
Orszag, a marathon runner and Red Sox fan who grew up in Lexington, Mass., worried that the administration job would take time away from his two children, of whom he has joint custody with his ex-wife.
"Once he became comfortable about that, it was a no-brainer for him," Jonathan Orszag said.
Staff writer Glenn Kessler and research editor Alice Crites contributed to this report.