One might think that the experience of being exposed as a political hack instead of an independent-minded budget director would keep Peter Orszag from offering any more policy advice, at least publicly.  Instead of resigning or just keeping quiet for a few days, Orszag has decided to double down on his hackery on the official OMB blog.  His recipe for the spiraling deficit he badly underestimated, in the face of an economic downturn that he also badly underestimated?  More spending!

During an economic downturn, one wants to allow the deficit to increase, so deficit reduction should be focused on the out-years – after the economy has recovered. That said, the out-year deficits hover in the range of 4 percent of GDP, which is higher than desirable. Getting the out-year deficit under control is a top priority of the Administration.

We are in the midst of the policy process surrounding the FY 2011 budget, and that process will include proposals to put the nation back on a fiscally sustainable path.  In the meantime, we have to stop making these longer-term deficits worse – which is why the Administration supports statutory pay-as-you-go legislation, so that any new tax or entitlement initiatives are fully paid for. (If pay-go rules had been followed over the past eight years, the projected deficit would be $5 trillion lower over the next decade.)

In addition to avoiding making the problem any worse, we need to address the key driver of our long-term deficits: health care costs. The federal government simply cannot be put on a fiscally sustainable path without slowing the rate of health care cost growth in the long run. That is why the Administration is insistent that health care reform not only be deficit neutral over the next ten years, but also incorporate changes that will help reduce the deficit thereafter.

Wait, wait, wait.  In one paragraph, Orszag scolds the previous administration for not following pay-go rules.  In the very next breath, Orszag then says that Congress needs to spend more to “reform” health care regardless of revenue assumptions.  Let’s recall that the previous administration’s deficits put together were fractions of what we’ll have under Barack Obama’s economic plans.  Remember this chart?

All those dark red lines are CBO projections of deficits under the directions Obama has proposed.  While pay-go may have helped prevent deficit spending in the Bush years — a tough argument, considering the 9/11 attacks and two wars that operated mostly outside of the budget process — the worst deficit under all-Republican governance came to less than a quarter of what Obama will produce this year.  And let’s not forget that Democrats controlled spending from 2007 onward, and they deliberately bypassed Bush for the 2009 budget, waiting until Obama took office to pass most of their spending priorities.

That’s not the only absurdity in Orszag’s blog posting, either:

It is worth noting, however, that by 2019, the difference between non-interest spending and revenue, which is also known as the “primary deficit,” is only 0.6 percent of GDP. Interest payments, which almost entirely represent the cost of the debt accumulated due to the policies of past administrations and the need to run short-run deficits to help the economy recover from the worst downturn since the Great Depression, are 3.4 percent of GDP.

Again, consult the chart above.  The deep red lines do not represent some adjustable-rate interest on bond payments.  The Obama administration plans to swamp the US with half as much accumulated debt in ten years that it took 70 years to accumulate under its predecessors, and that’s if we’re lucky.  These very clearly are not “short-run deficits” based on the need for economic recovery.  They slow down to $800 billion in 2012 and 2013, twice the Republican Congress’ deficit in 2004, and begin ballooning again after that.

Besides, what does it matter what the “primary deficit” is compared to interest payments?  Is Orszag suggesting that the US will default on its interest obligations?  That should do wonders for the dollar.

Orszag is trying his best to spin numbers to keep Obama’s domestic agenda afloat.  OMB has always been a political animal, but under Orszag’s direction, it has become a laughingstock.

Update: James Pethokoukis says the deficit projections are even worse than Orszag admits:

Those numbers, however, are actually a bit on the rosy side. In his blog, Douglas Elmendorf, director of the Congressional Budget Office, notes that the forecasts presume no change in current tax laws, such as the continued existence of the Bush tax cuts and the alternative minimum tax (AMT), which grabs more and more taxpayers ever year at a lower and lower income level.

Such forecasts also assume annual spending increases grow at the rate of inflation. But tomorrow is rarely the same as today in Washington. A more realistic scenario — if the AMT were indexed for inflation, most of the Bush tax cuts continued and spending rose as it has in the past — would see the deficit at 8.5 percent of GDP in 2019. That is a level, before the current crisis, not seen since World War Two.

Budget numbers like these are generated on a cash accounting basis. They don’t take into account the underfunding of America’s vast entitlement programs and the annual changes in the net present value of those programs.

Be sure to read it all.