Top budget official: ‘Economy is weak’

March 9, 2009 at 12:00a.m.

WASHINGTON (AP) — The White House’s top budget official declared that “fundamentally, the economy is weak” Sunday while saying the administration’s own financial predictions could need a revision by midyear.

Peter Orszag, President Barack Obama’s Office of Management and Budget director, said in television interviews that the economic downturn has been years in the making but cautioned that the new administration wasn’t yet looking at a second economic stimulus package. Orszag said the already-in-place $787 billion stimulus should have a chance to work before officials ask Congress to consider a sequel.

“I don’t think we should be chasing our tail, constantly revising assumptions,” Orszag said. “Let’s see what happens; let it work. We’ll have a midsession review later in the year. We’ll have an opportunity to revise the assumptions at that point.”

That revision, though, seemed unavoidable.Obama’s budget assumes the economy will grow at about 3.2 percent. Given climbing unemployment, shrinking credit and a general frustration over a crumbling economy, that now seems unrealistic.

Orszag acknowledged the federal budget is “uglier than we would like,” but he blamed last year’s budget process for most of the spending and defended Obama’s decision to go forward with it without seeking more changes.

The $410 billion spending bill includes the kinds of lawmakers’ pet projects that Obama pledged as a candidate to eliminate. His top aides say Obama would overlook for now the time-tested tradition that allows lawmakers to divert millions at a time to pet projects, called “earmarks,” in the hopes of moving on.

The measure, expected to be voted on by the Senate this week, keeps the government open for business through Sept. 30, when the federal budget year ends. Taxpayers for Common Sense, a watchdog group, identified almost 8,600 earmarks totaling $7.7 billion; Democrats say the number is $3.8 billion and that just under half of the projects come from GOP lawmakers.

Orszag also pleaded for patience as the 6-week-old administration looks for solutions: “Well, I think fundamentally, the economy is weak. Job losses began in January of 2008. The stock market started declining October 2007. This has been, you know, eight years in the making, and again, it’s going to take some time to work our way out of it.”