Peter Orszag, the all-powerful White House budget director, will be the first senior member of President Barack Obama’s economic team to leave the administration, probably in a few weeks’ time.
His departure, while not unexpected, leaves a significant gap that Mr Obama will surely try to fill as soon as he can given the urgency with which America’s dire fiscal position needs to be tackled.
Despite Mr Orszag’s young age of 41, he is considered one of the most influential budget director in decades, playing a pivotal role in engineering Mr Obama’s two signature pieces of legislation so far: the stimulus bill and healthcare reform.
This will make him tough to replace, and the most likely candidates at this point are Laura Tyson, the economics professor at Berkeley, and Gene Sperling, the adviser to Tim Geithner at the treasury department. Both have star-studded resumes, including stints as top economic counselors during the Clinton administration in the 1990s.
Whoever gets the job will be in the unenviable position of making a series of very tough choices on spending and taxation in the coming years. Mr Obama is coming under increasing pressure from both the public and the markets to reduce the deficit to an acceptable level. And interestingly, Federal Reserve chairman Ben Bernanke has also recently been more vocal on the issue of deficit reduction , which is seen within the central bank as key to the long-term health of the US economy.
