For Orszag, if Not His Kids, CBO Is Anything but Boring

Posted April 13, 2007 at 4:26pm

Congressional Budget Office Director Peter Orszag is not only one of the country’s chief economists, he’s also a doting father who, since taking over the agency in January, occasionally has brought his young children to watch his appearances before Congressional committees.

At a hearing in January, in which Orszag’s 7-year-old daughter was excited to show up in the background on the C-SPAN broadcast, Senate Budget Chairman Kent Conrad (D-N.D.) described the new CBO chief as “a distinguished economist and one of the most prolific writers in the economic field.”

“He has dealt with almost all of the major issues that are facing us as significant challenges in the years ahead,” Conrad added.

But Orszag later admitted that despite the high praise he’s received, his kids still have a way of keeping him grounded: Both his son and daughter refer to his new place of employment as the “Congressional boring office.”

However, the former deputy director of economic policy at the Brookings Institution was quick to point out that his children’s nickname for his new workplace “probably has more to do with how they perceive their father than how they view the office.”

Orszag, who began his four-year appointment at the CBO on Jan. 18, said the next several years actually will be a very exciting and critical period for the 32-year-old agency.

At his January hearing, and in several appearances before Congress since, Orszag stressed that one challenge currently overshadows all others in terms of Congressional budgetary issues: the growing cost of health care.

In fact, he said, in the coming years the CBO will have to, in part, become the Congressional health office to meet the challenge.

Health care spending “is the fundamental factor that determines the degree to which we are out of balance over the long term with the budget,” Orszag said. “The long-term fiscal picture really does collapse to health. Whether health care spending grows at the rate that it has in the past 40 years or at a much slower rate makes all the difference in the world. … That’s the whole ballgame.”

As he’s done at several hearings already this year (Orszag is averaging close to one a week since taking over the office), the new CBO director is more than happy to offer a quick economics lesson to illustrate his point.

Federal outlays for two major health care programs, Medicare and Medicaid, currently combine for about 4.5 percent of the U.S. economy. But if one were to project out the rate at which health care costs have grown faster than economic growth over the past 40 years, by 2050 Medicare and Medicaid will account for 20 percent of the economy.

“Twenty percent of the economy is basically what the entire government currently spends,” Orszag explained.

It’s a budget dilemma that requires “a Manhattan Project-level” of response on behalf of the government, he said.

And so, Orszag already has announced the formation of a new panel of outside health advisers whose mission will be to provide the office with information on the latest advances in health care research.

Orszag explained that unlike other legislative branch agencies who study this issue, the CBO can become a repository of outside knowledge on this subject.

Also, in his fiscal 2008 budget request, Orszag is asking Congress for additional funding, to the tune of $538,400, to hire staff specifically to study health care issues.

Those employees would add to the brainpower of the CBO’s 218 professional and management staff, 75 percent of whom hold a Ph.D. or master’s degree in their areas of study.

“We do have some IT investments, but more than 90 percent of our annual budget is for our people and that is our key resource,” Orszag said.

And maintaining that resource is one of Orszag’s most important tasks as he takes the reins of the CBO partway through a fiscal year overshadowed by a continuing resolution on spending.

“There are things that one can do in the short term to make the numbers add up — delaying some investments in computers, delaying some hiring decisions — but over time that kind of strain will show up in productivity and the kind of analysis and reports and what have you that we can provide to the Congress,” Orszag said.

But as the CBO “makes do” for now, Orszag said Congress needs to understand that in terms of long-term budget planning for the legislative branch, investments in brainpower are just as important to the institution as, say, security equipment for the Capitol Police or construction tools for the Architect of the Capitol.

“What has been happening in the market for Ph.D.s and other highly skilled professionals has made life more difficult for places like CBO,” he said. “Over the past 20 years the outside options for such people have become increasingly attractive, and we are lucky that CBO is such an incredibly good place to work that we are able to retain and recruit very highly skilled workers. But there is strain placed on the system from what’s happening not only in the private sector but academia, the Federal Reserve and other places that economists and policy analysts could go.”

It’s an issue that has long resonated on Capitol Hill as lawmakers and some private groups have advocated for higher pay for staff. But at the Hill’s budget office, they know you can’t just add more dollars.

“We continue to attract people because we have such a great reputation and it’s a great place to work,” Orszag said. “But that having been said, it’s just as important to realize the constraints under which we are operating. Understandable constraints. But they still are real nonetheless.”