Jackson County Democrats

Tracnscript taken from http://www.pbs.org/newshour/bb/politics/jan-june09/stimulus_02-05.html

JEFFREY BROWN: From the White House, I'm joined by Budget Director Peter Orszag. He's been negotiating with senators today and throughout the week.

Mr. Orszag, as we speak, how close are we to some kind of compromise that can pass the Senate?

PETER ORSZAG, White House budget director: Well, I hope we're close. And the reason I hope we're close is, again, we need to make sure we get this economy back on track.

The gap between how much the economy is producing and how much it could produce amounts to $2 trillion over the next two years. That hole needs to start to be filled in.

JEFFREY BROWN: The efforts underway by some senators in both parties to strip out $100 billion to $200 billion, is that something the president can sign on to?

PETER ORSZAG: Well, we think the package is about the right size. Obviously, the legislative process will work its way. I want to again emphasize the reason that we think it's about the right size is it will help create 3 million to 4 million jobs -- create or save 3 million to 4 million jobs and get this economy back on track.

Unemployment insurance claims this morning were the highest since 1982. The economy lost 2.5 million jobs last year. We're facing the worst crisis since the Great Depression. The time to act is now.

JEFFREY BROWN: But you're also facing a lot of criticism, and that criticism seems to be growing. So there is this move to strip out some things, to get it perhaps down to about $800 billion, you don't see the bill moving in that direction at this point?

PETER ORSZAG: Well, I think there's a healthy debate. It's part of the legislative process. Again, what I want to stay focused on is that, broadly speaking, the package is about the right size and I think it has the right balance between investments in infrastructure that will help promote future economic growth, tax provisions, assistance like unemployment insurance and food stamps and other provisions that spend out fast and help to bolster the economy immediately. The portfolio as a whole is well balanced.

JEFFREY BROWN: Well, in his op-ed today, the president referred to what he called misguided criticisms of the plan that, quote, "echo the failed theories that helped lead us into this crisis." Was the president -- were you taken by surprise by the level of criticism that's hit?

PETER ORSZAG: No, I think this is part of the natural process of crafting a package, and I think it's healthy. I think it's healthy they everyone is participating and putting forward ideas.

The package already includes provisions that have been put forward by prominent Republican senators. There's bonus depreciation for businesses to allow them to deduct the expenses of making investments faster. The alternative minimum tax was added to the package at the suggestion of Senator Grassley.

So I think this is part of the normal and healthy process through which legislation occurs.

JEFFREY BROWN: But some analysts today have been citing this op-ed and some recent talk by the president as signaling a more combative effort, that is moving away from this bipartisan effort that he started with, which didn't seem to be working, and now some tougher talk. Is that right?

PETER ORSZAG: Well, again, I think the important thing is to get the package enacted. And I think it's healthy that these discussions are occurring. There are obviously Republicans and Democrats in discussions over the legislation. And that's, frankly, the way it should be.

JEFFREY BROWN: One of the big questions here all along -- and we've discussed it on the program -- is the mix of long-term, big goals and short-term fixes. And there's been a big argument, I think, that's played into some of the debate that's hit you.

Is it possible -- I mean, the theory was that it was possible to do both, to tackle some big issues like energy and health care while stimulating the economy quickly. Do you think, in retrospect, it's been something of a mistake to try to take on too much?

PETER ORSZAG: I don't think so, because I want to come back to that point I started with, which is the gap between how much the economy is producing and how much it could produce. It's $2 trillion, $1 trillion a year over the next two years. That's $12,000 in lost income -- just evaporated -- that's not there for a family of four on average.

Filling in that gap requires moving beyond just the very narrow package of things that immediately spend out 100 percent over the next three or four months and that have high bang for the buck.

If you restricted the package just to those provisions, you're leaving way too much macroeconomic risk on the table. And as you expand the package beyond that narrow set of provisions, why not, in addition to getting the economy back on its feet, provide firm ground for future economic performance? It's almost common sense, I think.

Timeline for spending

JEFFREY BROWN: So you mean you're saying that it's OK that a lot of this money will not be spent in the first, say, 18 months, because that's been a criticism even from some on the Democratic side?

PETER ORSZAG: Well, again, I think that this is why we're looking for a balance. The Congressional Budget Office has analysis of the Senate package, suggested that more than three-quarters of the money will spend out over the next 18 months. Some people think that's too high; some think that's too low. It seems pretty good to me.

You don't want -- you don't want 100 percent, because that would create an air pocket at the end of 2010, which would also be a problem. So, again, I think what we're seeking here is a balance, and that's what the package reflects.

JEFFREY BROWN: And speaking of balance, another part of the criticism from opponents on the Republican side is the proper balance of taxes versus spending. As you know, there's been a lot of criticism of the tax plans that the president's put forward and suggestions that more of this money, more of this plan should go towards different and bigger tax cuts. What's the response?

PETER ORSZAG: Well, again, let's look at what the evidence suggests. Respectable economists, whether Republican or Democrat, will tell you that money that you get out the door for an infrastructure project or for direct spending has a higher bang for the buck in terms of creating jobs and jump-starting the economy than tax provisions do, because part of the tax provisions are saved rather than adding to aggregate demand. On the other hand, tax provisions can get out the door really quickly.

So, again, I think it's a balance between the high-bang-for-the-buck stuff, which may spend out slightly slower, and tax provisions, which can get out the door fast, but have lower bang for the buck. And that's what this package reflects.

JEFFREY BROWN: But you're involved in negotiations ongoing. Are some of those things, the tax provisions, are they on the table, as well?

PETER ORSZAG: Well, actually, I read that I was in negotiations today. I've been hard at work here all day. So the negotiations are occurring between senators -- or among senators, I should say, and that's the way it should be at this point. The legislative process is working its will.

JEFFREY BROWN: Well, but from the perspective of where you sit, you're well involved. And is the administration willing to give on some of the tax provisions? Are those kinds of things on the table, from your perspective?

PETER ORSZAG: I don't think it's -- I don't think I should be negotiating at this point on national television. I think the important point, again, is the package as a whole reflects a balance of fast-spending things that will help jump-start the economy, make key investments in health care, and in education, and as a whole helps to get the economy back on track.

We have to remember the context here -- and I think it's easy to forget that -- that we are facing this very severe economic crisis that we're inheriting and that needs to be addressed and that will take some time to work our way out of.

JEFFREY BROWN: All right, one other controversial area I want to talk to you about. That's the "buy American" provision that upset many other nations.

The president expressed some concerns with it the other day. The language was toned down in the Senate, but I want to try to be clear about this. Is the president saying that he could live with the provision in some form? Or does it need to be taken out all together?

PETER ORSZAG: I think what the president has said is that we want to be consistent with our World Trade Organization obligations. And we're going to make sure that we are, which, I think, is the key criteria to be applied here.

JEFFREY BROWN: As a practical matter, though, what does that mean, in terms of using only American material?

PETER ORSZAG: Well, again, as a practical matter, it means that any provisions will be fully consistent with international trade law and international trading practices. And I think I should probably leave it at that.

JEFFREY BROWN: All right, one more thing. I know from talking to you in the past that you are a student of the federal budget, that you have worried much about the budget deficit in the past. Here you are at work on a plan that is going to leave this country with a very large deficit.

Do you have qualms about that? Or is this a question of there's no alternative at the moment?

PETER ORSZAG: I think, unfortunately, there's no alternative. We are inheriting a large deficit even if we don't act. We're also inheriting this severe economic crisis. We need to act.

And then, as we emerge from the downturn, we need to get our medium-term and long-term deficits under control. We're going to have a lot more to say about that in a few weeks when the president unveils the budget that will be out before the end of February.

JEFFREY BROWN: All right.

PETER ORSZAG: And that will deal with the next 5 or 10 years.

JEFFREY BROWN: All right. White House Budget Director Peter Orszag, thank you very much.

PETER ORSZAG: Thanks for having me.