This Week Transcript: Peter Orszag and Eric Cantor

March 1, 2009 — -- 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 ANDBUDGET

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

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

STEPHANOPOULOS: Obama's ambitions.

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

STEPHANOPOULOS: Is the president's bold agenda achievable? WillCongress choke on the cost? We'll ask the cabinet member who wroteObama's budget and the congressman who's now the president's sparringpartner.

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 PeterOrszag, only on "This Week."

Then...

OBAMA: Our combat mission in Iraq will end.

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

And, as always, the Sunday funnies.

BILL MAHER, TALK SHOW HOST: It was a powerful speech. Joe Bidensaid it made the hair that was transplanted from the back of his neckstand 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 allthis week, each day another sweeping proposal from President Obama andeach day more signs of just how sick our economy is, with warningsthat another depression is increasingly possible.

The key question: How should government respond to this economicemergency? We'll hear from both sides this morning, starting with thekey player crafting President Obama's budget, Budget Director PeterOrszag.

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

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

ORSZAG: I think what it means is it just underscores that we'veinherited these pair of trillion-dollar deficits. Remember, that wasa 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 thesetwo problems that we need to face, the trillion-dollar gap between howmuch the economy is producing and how much it could produce and thenthese trillion-dollar deficits under current policies.

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 thoseout-year deficits down, and that's what this budget does.

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

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

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

ORSZAG: Well, what I would say is, our forecast is entirely inline with, for example, the Congressional Budget Office's, once youinclude the effects of the recovery act. Now, since those forecastswere done...

STEPHANOPOULOS: You got this bad news about last year.

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

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

ORSZAG: I think so. And, again, the deficit reduction doesn'tjust come from the economy recovering. And by 2013 or 2014, let's allhope that the economy is back on its feet. That's what we're tryingto do through all -- all the changes that we're making.

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

STEPHANOPOULOS: But most of the deficit reduction comes fromassuming at first that the war in Iraq was going to continue at thesame 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 goingto spend about $140 billion on the war this year. The president iscommitted to getting -- to winding down the war. That's going to savemoney. It's pretty clear.

STEPHANOPOULOS: The Republicans have taken aim specifically atthe revenues in this package, especially the idea you have to getabout $600 billion from capping carbon emissions. Here was NewtGingrich speaking this week.

(END VIDEO CLIP)

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

(END VIDEO CLIP)

STEPHANOPOULOS: You've talked a lot about honesty andtransparency in the budget. The Republicans are saying you're simplynot being honest, that this revenue from the carbon -- from cappingcarbon tax is going to be a tax on everyone, pure and simple.

ORSZAG: What's very clear is this budget delivers a tax cut to95 percent of working families. I mean, I think we have to come backto the basic question here. I just reject the theory that the onlything that drives economic performance is the marginal tax rate onwealthy Americans and the only way of being pro-market is to funnelbillions and billions of dollars of subsidies to corporations.

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

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