Orszag: Obama lost leverage for fiscal fights ahead

Despite Democratic claims to the contrary, President Obama’s former top budget adviser thinks his old boss has lost leverage for the budget battles to come in the wake of this week’s deal avoiding an immediate fall over the “fiscal cliff.”

In comments Wednesday on CNBC that were instantly circulated by the Republican National Committee, former Office of Management and Budget head Peter Orszag disputed Mr. Obama’s assertion that he would not bargain with GOP lawmakers over raising the nation’s debt limit, which Congress will vote on in late February or early March.

“While I will negotiate over many things, I will not have another debate with this Congress on whether or not they should pay the bills that they’ve already racked up through the laws they passed,” the president said late Tuesday night.

But Mr. Orszag said the president may not have much choice in the matter, with fights over big spending cuts still looming under the so-called “sequestration” approach.

“Well, I don’t know that that statement actually frankly matters that much,” he said. “You know, the sequester was only delayed by two months, so you’re going to have to negotiate over that. You’re going to have to negotiate over the appropriations bill for the funding the daily operations of the government.”

“So if you’re negotiating over those things, and the debt limit’s kind of thrown in, you can say you’re not negotiating over the debt limit, but there will be negotiations in February or March.”

In the same interview, Mr. Orszag, now a vice chairman for global banking at Citigroup, said the White House lost bargaining power by not insisting that raising the debt limit be included in the fiscal cliff deal.

“My own perspective at least is I think the White House — in this second-best world — won that round, but they, by not insisting that the debt limit be tied to the package, it’s entirely possible they’re going to win the week and lose the quarter,” he said.

The fiscal deal was created to solve a drawn-out, colossal battle over raising the debt limit in the summer of 2011. After the bitter brinksmanship that played out for weeks, the nation’s credit rating took a hit, and the public-approval ratings for all the top congressional leaders dropped.

After conceding to the first tax increase in 20 years as part of the fiscal cliff deal, Republicans say they have little choice but to use the debt-ceiling issue to press Democrats to compromise on spending cuts.

“I hope Republicans will fight as hard on the debt ceiling as Barack Obama did on tax rates,” Sen. Lindsey Graham, South Carolina Republican, said earlier this week.

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