–White House Budget Chief Says Health Law Critical To Fiscal Fix
–Volker’s VAT Commments Are ‘Private’ Views Not Admin’s
–Sees ‘Growing Sense of Momentum’ For U.S. Economy
–Job Creation Is ‘Most Immediate’ Problem Facing US

By John Shaw

WASHINGTON (MNI) – White House budget director Peter Orszag said
Thursday that the U.S. must “get ahead” of the long-term deficit
problem, adding the report in December of a newly established deficit
reduction commission could play a critical role in devising policies to
bring down future deficits.

“We’d like to get ahead of the problem,” Orszag said in remarks at
the Washington Economic Club.

He said failure to do so would pose an “excruciating set of trade
offs” in the future.

Orszag said that the new health care reform law will also play a
critical role in stabilizing the nation’s deficit problems.

“We’re focused on executing and implementing,” the new health care
law, Orszag said.

He predicted the sweeping plan will generate “larger” savings than
the Congressional Budget Office estimated when it said, in a preliminary
analysis, that the health law would generate $143 billion in savings
over ten years and about $1.3 trillion in savings over the second 10
years.

Orszag said the new law also creates a raft of pilot programs and
demonstration projects that could generate sizeable budget savings for
health care programs.

The White House budget chief said that the law creates a Medicare
provider payment board that may be able to identify large savings in
Medicare, one of the key programs that is driving long-term deficits
skyward.

“This is a very substantial change,” Orszag said of the new
Medicare board.

Orszag declined to say if the administration will push for an
overhaul of Social Security — or what kind of proposals it might be
willing to embrace.

“The options are fairly well known,” he said.

Orszag, in response to a question, said the administration has no
official position on the merits of instituting a VAT. He said that
comments this week supporting that idea by former Federal Reserve Board
Chairman Paul Volker were given by Volker in his “private capacity.”

He said the deficit reduction panel should review a wide range of
spending and revenue issues without any pressure from the
administration.

Orszag said that the American economy is clearly gaining strength
and cited a “growing sense of momentum.”

He said the “most immediate challenge” the U.S. economy faces is in
creating jobs.

“It’s going to take time for it to turn around,” he said, referring
to job growth.

“It’s better than it was but it’s not as good as it should be,” he
said.

Finally, Orszag said he expects Congress to deal this year with the
scheduled expiration of a host of tax cuts that were approved in 2001
and 2003.

He repeated that the administration supports renewing those that
are aimed at taxypayers earning less than $250,000 a year.

“I think this issue will be addressed this year,” he said.

“The tax question will be resolved,” he added.

** Market News International Washington Bureau: 202-371-2121 **

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