This Week Transcript: Peter Orszag and Eric Cantor

ABC'S "THIS WEEK WITH GEORGE STEPHANOPOULOS"

MARCH 1, 2009

SPEAKERS: GEORGE STEPHANOPOULOS, HOST

REP. ERIC CANTOR, R-VA., HOUSE MINORITY WHIP

PETER ORSZAG, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET

[*] (BEGIN VIDEO CLIP) STEPHANOPOULOS: Good morning, and welcome to "This Week."

Exclusively on "This Week" Sunday: Republican Whip Eric Cantor, OMB Director Peter Orszag, and Karl Rove joins Roundtable Sunday.

(ABC News/AP)

PRESIDENT BARACK OBAMA: The time to take charge of our future is here.

STEPHANOPOULOS: Obama's ambitions.

OBAMA: Health care cannot wait. Double this nation's supply of renewable energy. Make sure that you can afford a higher education.

STEPHANOPOULOS: Is the president's bold agenda achievable? Will Congress choke on the cost? We'll ask the cabinet member who wrote Obama's budget and the congressman who's now the president's sparring partner.

OBAMA: I'm going to keep on talking to Eric Cantor. Some day, he's going to say, "Boy, Obama had a good idea."

STEPHANOPOULOS: Republican Whip Eric Cantor, OMB Director Peter Orszag, only on "This Week."

Then...

OBAMA: Our combat mission in Iraq will end.

STEPHANOPOULOS: ... a promise kept. But why are Democrats more skeptical than Republicans? That and the rest of the week's politics on our powerhouse roundtable with George Will, Katrina vanden Heuvel, plus, Bill Clinton's pollster Stan Greenberg and George W. Bush strategist Karl Rove.

And, as always, the Sunday funnies.

BILL MAHER, TALK SHOW HOST: It was a powerful speech. Joe Biden said it made the hair that was transplanted from the back of his neck stand up.

(END VIDEO CLIP)

ANNOUNCER: From the heart of the nation's capital, "This Week" with ABC News chief Washington correspondent George Stephanopoulos, live from the Newseum on Pennsylvania Avenue.

STEPHANOPOULOS: Hello again. The headlines screamed out all this week, each day another sweeping proposal from President Obama and each day more signs of just how sick our economy is, with warnings that another depression is increasingly possible.

The key question: How should government respond to this economic emergency? We'll hear from both sides this morning, starting with the key player crafting President Obama's budget, Budget Director Peter Orszag.

Welcome to "This Week," your first Sunday show appearance.

ORSZAG: Good morning. STEPHANOPOULOS: Let me begin with the budget, $3.6 trillion on Thursday, you said you could cut the deficit in half over the next five years, based on reasonable but somewhat optimistic assumptions. Then, on Friday, we learn that the economy dropped more than 6 percent in the fourth quarter of last year. Does that mean you have to go back to the drawing board?

ORSZAG: I think what it means is it just underscores that we've inherited these pair of trillion-dollar deficits. Remember, that was a very negative number for the end of last year before we took office. It just...

STEPHANOPOULOS: But it affects this year.

ORSZAG: It does. It just -- it -- and that's why we have these two problems that we need to face, the trillion-dollar gap between how much the economy is producing and how much it could produce and then these trillion-dollar deficits under current policies.

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The first thing we had to do was get the recovery act enacted. We did that. That's intended to address that first gap, the GDP gap. As we go out over time and the economy recovers, we need to get those out-year deficits down, and that's what this budget does.

STEPHANOPOULOS: But the question is, is the stimulus going to be enough to actually get the kind of growth you're calling for? I want to show a chart here that shows where the OMB projections of the economy turn up right now.

You say that, over the next year, the economy is going to fall about 1.2 percent, the average private forecast 2.0 percent. The case you're putting to the banks, the stress tests you're putting on the banks assumes that the economy is going to fall by 3.3 percent.

And, you know, economists like Allen Sinai say it's a hope, a wing, and a prayer. It's a return to a sanguine view of the economy that is simply not justified.

ORSZAG: Well, what I would say is, our forecast is entirely in line with, for example, the Congressional Budget Office's, once you include the effects of the recovery act. Now, since those forecasts were done...

STEPHANOPOULOS: You got this bad news about last year.

ORSZAG: ... and the -- which is why it's a good thing we acted so quickly on the recovery act. Going out over time, we have to get these out-year deficits down, and that's what we're intended to do.

STEPHANOPOULOS: But -- but -- but looking at this year, because your whole deficit reduction strategy hinges on the economy growing at the rate you say it's going to grow. It is still realistic to think your numbers are going to be met?

ORSZAG: I think so. And, again, the deficit reduction doesn't just come from the economy recovering. And by 2013 or 2014, let's all hope that the economy is back on its feet. That's what we're trying to do through all -- all the changes that we're making.

But we have $2 trillion in deficit reduction contained in the budget. We've got both spending constraints and additional revenue, as the economy recovers. That's where a lot of the deficit reduction comes from.

STEPHANOPOULOS: But most of the deficit reduction comes from assuming at first that the war in Iraq was going to continue at the same levels for several years, and that simply wasn't going to happen, was it?

ORSZAG: Well, let's -- let's be clear about this. We're going to spend about $140 billion on the war this year. The president is committed to getting -- to winding down the war. That's going to save money. It's pretty clear.

STEPHANOPOULOS: The Republicans have taken aim specifically at the revenues in this package, especially the idea you have to get about $600 billion from capping carbon emissions. Here was Newt Gingrich speaking this week.

(END VIDEO CLIP)

GINGRICH: How dumb do they think we are that they can pretend that an energy tax isn't an energy tax, and they can pretend that every retired American who uses electricity isn't going to pay it, and every person in New Hampshire who uses heating oil isn't going to pay it, and every person who drives a car isn't going to pay it?

(END VIDEO CLIP)

STEPHANOPOULOS: You've talked a lot about honesty and transparency in the budget. The Republicans are saying you're simply not being honest, that this revenue from the carbon -- from capping carbon tax is going to be a tax on everyone, pure and simple.

ORSZAG: What's very clear is this budget delivers a tax cut to 95 percent of working families. I mean, I think we have to come back to the basic question here. I just reject the theory that the only thing that drives economic performance is the marginal tax rate on wealthy Americans and the only way of being pro-market is to funnel billions and billions of dollars of subsidies to corporations.

That is the heart of this argument. And I think it's -- I think we've already -- we've seen what the effects are over the last eight years.

STEPHANOPOULOS: But you do concede that this capping of carbon emissions is going to increase energy rates for just about everyone in the country? And that is the equivalent of a tax, isn't it?