Can Peter Orszag keep the President’s political goals economically viable?

Orszag can match Lawrence Summers in policy expertise, and has proved to be a subtle and persistent political player.

…The deficit spectre has loomed over every major debate. The most contentious issue has been health care. The Administration was divided into three camps. According to White House officials, a group including Vice-President Biden and David Axelrod, a senior adviser, and led by Summers was hesitant to make a major push on health care this year, especially given the fact that a full plan would cost roughly a trillion dollars over ten years. Then, there was Tom Daschle, the former South Dakota senator who was Obama’s original choice to lead the health-care-reform team, and his staff at the White House and at the Department of Health and Human Services. In January, Daschle became alarmed that health care would be either absent from the Obama budget or not given the emphasis that Obama had promised. (When Daschle went to see Rahm Emanuel to register these concerns, the President, who had been quiet during the early health-care meetings, stopped by and reassured Daschle of his commitment.) Orszag came to the debate with a third option, which combined Summers’s concern about deficits and Daschle’s insistence that Obama tackle health care this year. He argued that health-care reform is deficit reduction.

Orszag is convinced that rising federal health-care costs are the most important cause of long-term deficits. As a fellow at the Brookings Institution, he became obsessed with the findings of a research team at Dartmouth showing that some regions of the country spend far more money on health care than others but that patients in those high-spending areas don’t have better outcomes than those in regions that spend less money. If spending more on health care has no correlation with making people healthier, then there must be enormous savings that a smart government, by determining precisely which medical procedures are worth financing and which are not, could wring out of the system. “I spent several months in very intense study,” Orszag told me. “The reason that I wanted to go to C.B.O. was I thought that was one of the key bodies that could really delve into what we could do about it.”

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