UPDATE 1-Cutting U.S. deficit now risks recovery, Orszag says
WASHINGTON, July 28
WASHINGTON, July 28 (Reuters) - White House budget chief Peter Orszag said on Wednesday it would be "foolish" to cut the U.S. deficit while economic growth was still frail, but it would be equally foolish not to significantly curb the deficit by 2015.
Orszag told an audience at The Brookings Institution, a Washington think-tank, that failing to take real steps toward closing the record U.S. budget gap would do as much harm to the economy has choking off fiscal stimulus now.
It was his last public speech before stepping down as head of the White House Office of Management and Budget on Friday.
President Barack Obama, who has named OMB veteran Jack Lew to replace Orszag, has used deficit spending to help the U.S. economy recover from the worst recession in 70 years. But the president has also vowed to phase in budget-curbing measures to bring the deficit under control in due course.
The White House projects a record $1.47 trillion budget deficit this year, or 10 percent of U.S. gross domestic product, but plans to halve that amount to 5 percent by 2013.
Investors, unnerved by a European debt crisis sparked by Greece earlier this year, will play close attention to the United States' ability to stick to that goal. Obama reaffirmed the pledge at the Toronto Group of 20 summit in June. (Reporting by Alister Bull, Editing by Neil Stempleman)