OMB chief: ‘Economy is weak’

The White House’s top budget official declared on Sunday that “fundamentally, the economy is weak” while saying the administration’s own financial predictions could need a revision by midyear.

Peter Orszag, the director of the Office of Management and Budget, said in television interviews that the economic downturn has been years in the making but cautioned that the new administration wasn’t yet looking at a second economic stimulus package. Mr. Orszag said the already-in-place $787 billion stimulus should have a chance to work before officials ask Congress to consider a sequel.

“I don’t think we should be chasing our tail, constantly revising assumptions,” Mr. Orszag said. “Let’s see what happens, let it work. We’ll have a midsession review later in the year. We’ll have an opportunity to revise the assumptions at that point.”

That revision, though, seemed unavoidable.

President Obama’s budget assumes the economy will grow at about 3.2 percent. Given climbing unemployment, shrinking credit and a general frustration over a crumbling economy, that now seems unrealistic.

Mr. Orszag acknowledged the federal budget is “uglier than we would like,” but he blamed most of the spending on last year’s budget process and defended Mr. Obama’s decision to go forward with it without seeking more changes.

“This is like your relief pitcher coming in into the ninth inning and wanting to redo the whole game,” he said. “Next year, we will be the starting pitcher, and the game is going to be completely different.”

The $410 billion spending bill includes the kinds of lawmakers’ pet projects that Mr. Obama pledged as a candidate to eliminate. The president’s top aides say Mr. Obama would overlook for now the time-tested tradition that allows lawmakers to divert millions at a time to pet projects, called “earmarks,” in the hopes of moving on.

The measure, expected to be voted on by the Senate this week, keeps the government open for business through Sept. 30, when the federal budget year ends. Taxpayers for Common Sense, a watchdog group, identified almost 8,600 earmarks totaling $7.7 billion; Democrats say that the number is $3.8 billion and that just under half of the projects come from GOP lawmakers.

Mr. Orszag also pleaded for patience as the 6-week-old administration looks for solutions: “Well, I think fundamentally, the economy is weak. Job losses began in January of 2008. The stock market started declining October 2007. This has been, you know, eight years in the making, and again, it’s going to take some time to work our way out of it.”

Republicans weren’t swayed by Mr. Orszag’s arguments, saying the Democratic spending bill doesn’t address the problems or keep Mr. Obama’s campaign pledges.

“First of all, if you make a promise, people expect that you live up to it. And that’s why this administration’s refusal to go in and change this bill, I think, is a false position,” said Rep. Eric Cantor, Virginia Republican and House minority whip.

“There is no way anyone could take what Mr. Orszag has said with any credibility,” Mr. Cantor said. “Of course they’re negotiating on this bill in the Senate right now. To say that ‘we would have drawn it differently’ but leave $430 billion-plus dollars on the table like this? No way.”

Rep. John Boehner, Ohio Republican and House minority leader, tried to remain civil in his opposition.

“Listen, I want to work with the president on behalf of the American people,” Mr. Boehner said. “That’s what they sent us to Washington to do. And while I like the president as much as the American people do — I think he’s a great guy — there are serious differences in terms of the approach that he would like to take and the approach that I think many Republicans would like to take.”

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