Peter Orszag: Departure illustrates US fiscal woes

Peter Orszag is said to be leaving after less than 18 months of wrestling with record deficits and a deep recession. Most White House budget directors last two years.

It's a testament to the severity of America's fiscal woes that White House Budget Director Peter Orszag is said to be stepping down 17 months into his job.

Even in normal times, it's a rough assignment. The average tenure is two years in the postwar era. The fact that Mr. Orszag won't even last that long suggests the enormous challenges the Obama administration faces in trying to stimulate the economy while working to reduce record deficits.

"It's a killer job," says Alice Rivlin, who served two years as President Clinton's budget director and is now a senior fellow at the Brookings Institution in Washington. "It's always been a killer job ... This administration in particular has had a lot of budgetary issues on its plate and Peter was on top of all of them."

By most accounts, 2009 and 2010 were two of the most difficult budget years in recent history, with Orszag charged with funding the president’s sweeping legislative agenda, juggling the fiscal demands of two wars, and budgeting with a careful eye towards future spending.

During previous recessions, “we weren’t worrying about the long-term fiscal imbalance that we’re seeing right now,” says Roberton Williams, senior fellow at the Urban/Brookings Tax Policy Center. “The revenue shortfall and spending excess is much worse now than it was back then. Trying to figure out what to do with the budget is much more complex.”

Mr. Orszag is set to leave the post before the Obama administration begins to prepare its budget for the coming year, according to news reports. He is the first member of Obama’s Cabinet and the first of the President’s economic advisers to depart. Orszag came to the position well prepared, having served as director of the Congressional Budget Office for almost two years.

Counting Orszag, the last three directors have served less than a year and a half each. While Orszag served a crucial role on Obama’s Cabinet, helping to pass two of the administration’s most important pieces of legislation – the $940 billion health-care overhaul bill passed this spring and the $787 billion economic stimulus act passed in February 2009 – he also faced frustrating defeats.

The energy bill the administration pushed for passed in the House, but failed in the Senate, and Obama was unable to secure tax increases he wanted as part of the stimulus.

David Stockman, on the other hand, who served as budget director under President Reagan from 1981 through 1985 – while the country was in the throes of another recession – was "a major force behind Reagan getting through economic policies," said Mr. Williams. Mr. "Stockman really had an influence on what was going on."