Republicans take OMB director to task on budget assumptions

President Obama's $3.6 trillion fiscal 2010 budget came under more GOP fire on Tuesday as OMB Director Peter Orszag faced questions about the budget's assumptions.

House Budget Committee ranking member Paul Ryan, R-Wis., said the budget's economic projections were too rosy and that it incorrectly counted temporary military spending for the surge as savings.

At a committee hearing Tuesday, Ryan called the document "a sweeping transformation of the federal government, the likes of which we have not seen since the New Deal."

He pointed out that the budget predicted GDP would shrink by 1.2 percent in 2009 but grow 3.2 percent in 2010. That is far more optimistic than last month's Blue Chip Economic Indicators survey, which predicted that GDP would fall by 1.9 percent in 2009 and increase by only 2.1 percent in 2010.

Orszag countered that the OMB's figures are "in line" with those of CBO when the cost of the recently enacted $787 billion economic stimulus package is added. He also said the assumptions were locked in before last week's worse-than-expected GDP report. Orszag said he did not think it would be "productive" to recalibrate assumptions now but expected to do so for the midsession review. "The numbers in this budget are staggeringly high," Ryan responded. "If these scenarios in this baseline don't play out then they will be even higher."

Ryan was also critical of the $2.2 trillion in savings Orszag said the OMB had found. Ryan said $1.6 trillion of the savings was derived by projecting war spending for fiscal 2008, when the surge in Iraq began, through 2019. Orszag said the budget was written in the "traditional way," using the last full year, which was fiscal 2008, as its baseline for military funding.

Meanwhile, Rep. Jeb Hensarling, R-Texas, took aim at the $646 billion that is expected to be raised from a cap-and-trade program to limit greenhouse gases, which he charged would amount to a tax hike and hurt small businesses. Orszag argued that only 3 percent of small businesses would be affected. House Budget Committee Chairman John Spratt, D-S.C., praised the budget for aiming to halve the deficit by 2013. But he said that figure would still be high as a percentage of GDP. "We want to see it declining thereafter, so this is not by any means the end of the process," Spratt said.