Peter

I heard Peter Orszag, President Obama's ex-budget director speak at the Association for Corporate Growth's Capital Connection (ACG) in Chicago last week. The ACG is a trade organization largely catering to private equity firms and companies that seek to grow through acquisition--- that is, wealth creators and job generators.

He presented a rather grim view of the budget, stating his belief that there is actually little room on the spending side for real reductions. The military consists of 2/3 personnel and 1/3 systems and hardware costs, and since defense experts do not believe it is advisable to shrink our forces at this time and because systems have long lead times, little can be taken out of the military. Entitlement program changes, he believes, may be phased in over time, but little can be done about current retirees. He does believe that tax increases are necessary but advocates leaving the Bush tax cuts in place for two years and then allow them to automatically expire. Orszag failed to differentiate between extending the tax cuts for "the rich" from the middle class, and ducked the question about raising taxes when the economy is so weak (so the liberal argument goes, "well, we raised taxes under Clinton and got a boom."). Yes, but they did so at the front end of a once in a lifetime tech boom, not while the economy was straining to crawl out of a once in a lifetime financial catastrophe.

In addressing health care, he asserted that "the bill addresses costs more than is popularly believed," but expressed disappointment that the bill did not address tort reform (although he claimed that research shows that malpractice claims to not significantly affect costs).

While optimistic about the long term vibrancy of the U.S. economy, he said that 2012 would be "bumpy" and was bearish about prospects for the U.S. budget, given the partisanship that will undoubtedly be present in Washington after the elections.

Overall, Mr. Orszag left me a little flat. He was better after he got the obligatory bland jokes out of the way at the beginning. He attempted to steer a neutral political course in his remarks, but as a result, left unanswered the important questions about the overall efficacy of the stimulus, the effect on growth, employment, productivity, and innovaation that all these tax increases and regulatory burdens being foisted on business will have, and said nothing about financial reform.

Afterwards, I asked one professional what he thought the punchline of Orszag's remarks was, and he replied dryly, "I can't get rich. I can't retire. And I sure as hell can't get sick."