Orszag's successor as budget director faces a sea of red ink to deal with

The next White House budget director is likely to face even tougher fiscal challenges than outgoing director Peter Orszag, a key architect of the Obama administration’s health reforms and economic policies.

“There's a general sense that President Obama has had most of his spending fun already, and the next few years will be a period of tightening,” said Brian Riedl, a budget expert at the Heritage Foundation.

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Orszag’s successor as director of the White House Office of Management and Budget (OMB) is likely to write budgets that are much more austere than the ones crafted during the first two years of the administration. The $13 trillion national debt is on an unsustainable upward path, hastened by the recession and growing health care costs, and the OMB must find ways to rein it in.

Even before Obama’s inauguration, Orszag was helping guide the administration through major decisions. As a member of the transition team, and later as budget director, Orszag helped craft and oversee the $862 billion stimulus package. He later helped sell the historic overhaul of the healthcare system, calling it a necessary step to constrain the deficit.

Orszag this year drew up a budget that aims to halve the record 2009 deficit of $1.4 trillion in five years, partly through a freeze on non-security discretionary spending and with the help of a bipartisan commission that will propose changes to spending, tax and entitlement policies.

The responsibility for selling those medium- and long-term budget reforms to Congress will fall to the new OMB chief — and the rest of the White House.

“Sometime soon this administration is going to have to pivot toward bringing the budget deficit down, and they haven't made that pivot yet,” said Joe Minarik, who served as OMB associate director for economic policy in the Clinton administration.

The list of possible successors to Orszag includes: Gene Sperling, counselor to Treasury Secretary Tim Geithner; Laura Tyson, a senior economist in President Bill Clinton’s White House; Jacob Lew, a deputy secretary of State and former OMB director; and Rob Nabors, a former deputy to Orszag at OMB and now an advisor to White House Chief of Staff Rahm Emanuel. All four served as aides in the Clinton administration.

Other names mentioned have been Jason Furman, the deputy director of the White House National Economic Council, and Jeffrey Liebman, the current executive associate director of OMB.

Sperling’s name has come up often in budget circles. His name was linked to an OMB post under Orszag earlier this year, and he has been through bipartisan budget talks before. As National Economic Council director for Clinton, Sperling worked on the 1997 budget agreement between the White House and GOP congressional leaders that led to budget surpluses at the end of the decade. Lew, first as deputy OMB director and then OMB chief, was also a key negotiator in the 1990s budget talks.

With Orszag’s final day at OMB scheduled for July 30, Obama will nominate someone to fill the post soon. Since the budget director is a member of the Cabinet, the Senate must confirm the nominee.

Nominees for OMB directors are rarely rejected by the Senate, though the confirmation battle may serve as an opportunity for Republicans who are looking to highlight the daunting fiscal situation.

“The job of budget director is a little bit more difficult when advocating spending cuts in spending increases,” Riedl said. “It may not be a fun job.”