Comments on: What Orszag’s Resignation Really Signifies

By: Jonathan Bernstein

Jonathan Bernstein — Mon, 02 Aug 2010 21:18:27 +0000

Matt,

I agree with your comments about Congress, and OMB in general. But I’m really not convinced that you’re reading the tea leaves correctly on Orszag’s resignation. Basically, I’m really not convinced that Orszag sees middle-class tax increases as necessary, or at least as critical. His big thing has been long-term health care cost containment, and he basically won on that — not 100%, of course, but quite a bit.

I don’t know; tenure at OMB tends to be pretty short. It’s been an above median stressful eighteen months. We’ll find out eventually, but my money is on normal turnover.

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Mon, 02 Aug 2010 15:00:56 +0000

[...] is concentrating in boards and the executive because Congress wants it to, writes Matthew Dickinson: “The idea that members of Congress would prefer to incur the political [...]

By: Matthew Dickinson

Matthew Dickinson — Sun, 01 Aug 2010 03:34:25 +0000

Bob – You are right to caution that Orszag’s resignation may be driven primarily by the personal reasons he cites, although I stand by my assertion that Orszag’s focus on deficit reduction was not well received by the rest of Obama’s economic advisers, particularly Summers. I also think you are absolutely correct that Obama will wait until after the midterms, when he will receive the Debt Commission Report, before deciding whether to change direction and raise taxes on the middle class. I do not know what the Commission will recommend, but I am not very confident that Obama will embrace any recommendation that involves breaking his campaign pledge not to raise taxes on the middle class. He’s shown no inclination to take risks so far. As for the Senate’s antimajoritarian tendencies – we’ll have to revisit this issue after the midterms in November. It may be that the results will make this issue a moot point.

By: Bob Johnson

Bob Johnson — Sat, 31 Jul 2010 19:52:36 +0000

Matt,

Orzag may in fact be resigning for the reasons he stated, which seem weighty — particularly his impending marriage.

Obama may be waiting until after the midterms — with a report from the Debt Commission to support him — to break his promise on middle class taxes. He then has a year-and-a-half to make the case that his switch was absolutely essential to the economic health of the country, and perhaps, as happened after the Bush I and Clinton tax increases, economic growth and reduced deficits will kick in by the summer of 2012. Of course all this requires action by Congress, which may not have the stomach or the votes to raise middle class taxes, particularly if our undemocratic Senate has not junked its various anti-majoritarian procedures after the swearing in of the new Congress.

Bob Johnson