Capping Carbon Emissions May Increase Energy Rates, Orszag Says

Office of Management and Budget Director Peter Orszag admitted this morning that capping carbon emissions may increase energy prices but said Americans would receive other benefits through President Obama's budget.

"Let's be fair about this," Orszag said in an exclusive "This Week" interview with George Stephanopoulos.

"Either you're going to look at what is collected through the tax code and what's returned through the tax code. And on that basis, there's a tax cut for 95 percent of Americans, or you have to go all in. Let's also count the benefits that families get through Pell Grants, the benefits that they'll receive through constraining health care costs, the benefits that they get from weatherizing their homes, and so on. All in, this budget makes the vast majority of American families much better off."

Republicans have criticized the administration for not being honest about the revenues in the president's $3.6 trillion budget proposal. In particular, many Republicans claim the proposal to create roughly $600 billion from capping carbon emissions will increase energy rates and amount to a tax on everyone.

Gingrich Blasts Obama's Cap-and-Trade Plan

Former GOP House Speaker Newt Gingrich targeted the energy proposal earlier this week.

"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?" Gingrich said at the Conservative Political Action Conference in Washington on Friday.

While Orszag stressed that healthcare reform is "key to our fiscal future," he made clear the administration will not increase the deficit further to pay for health care reforms. If enough revenues don't come in, Orszag said, the administration will not scale back its health care promises.

If that's the case, "we need some other proposal," Orszag said. "We're going forward with health care. We're going to get health care reform done this year. I think this proposal will get enacted. But if it doesn't, then we're going to need to come up with some other offset."

Orszag: Obama Open to Health Commission

But asked which would take priority, health care or energy, if they are not able to fulfill both proposals this year, Orszag said simply they hope to do both.

"I think we can. We face big problems, and... we've got to tackle them. Clearly, this budget is changing course... and the GPS system is recalculating the route and people are getting used to that. But we have these big problems, and we need to tackle them."

Orszag also expressed openness to the idea of establishing some kind of commission on health care. "I think it's clear that we need some changes in the process," he said. "Let's focus on that, because that is the key driver of those long-term deficits. That's why we want to get reform done this year. We can make our health care system much more efficient, and that is the single most important thing we could do to get those long-term deficits under control."

The OMB director also said the nation will save much-needed government funds by ending the Iraq war. "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," he said.

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