Congressional Budget Office Director Peter R. Orszag has been approached by President-elect Barack Obama ’s transition team about becoming director of the White House budget office and is the leading candidate for the job, according to sources on and off Capitol Hill.

Orszag, like all candidates for posts in the Obama administration, would have to go through a vetting process before being nominated to head the Office of Management and Budget (OMB). The transition team press office said it does not comment on potential appointments.

Orszag has been director of the Congressional Budget Office (CBO) since January 2007 and is halfway through a four-year term. He has won the respect of Republicans as well as Democrats. CBO is a nonpartisan office that provides analysis of economic trends and budget alternatives and estimates the cost of legislative proposals.

Orszag, 39, is a veteran of the Clinton White House, where he was an economist for both the National Economic Council and the Council of Economic Advisers. Before becoming CBO director in January 2007, he was head of the Hamilton Project at the Brookings Institution, a Washington think tank seen as moderate to liberal.

Health Care Costs Pose Budget Problem

The next OMB director will have a difficult job, with economists projecting a fiscal 2009 budget deficit that could be around $1 trillion because of the sagging economy. Budget analysts warn that the long-term outlook is bleak because of the strain that rising health care costs and the aging baby boom generation will put on spending for Medicare, Medicaid and Social Security.

During his CBO tenure, Orszag has focused on health care costs and has tried to beef up CBO’s ability to analyze that sector of the economy. The agency will release reports in mid-December on critical issues facing the health care system and policy options for addressing them.

The rising cost of health care is a problem across the economy, and during his campaign, Obama made an overhaul of the health care system a priority.

Orszag has stressed that the rising cost of health care is the major problem facing the federal budget, even more than the demographic bulge from the retiring baby boom generation.

According to one Democratic aide, Orszag is well liked by Rep. Rahm Emanuel , D-Ill., who will be White House chief of staff in the Obama administration. Over the course of the year, as Democrats have tried to come up with economic stimulus plans, Emanuel would run proposals by Orszag to get his input on how the economic community views them, according to the aide.

At CBO, Orszag has been closely following many of the economic and budgetary issues the new administration will face, including the financial sector rescue plan (PL 110-343) enacted last month.

Budget Chairmen Show Support

Neither the House Budget chairman nor his Senate equivalent would discuss whether he is aware that Orszag is Obama’s choice, but both said they would fully support him taking that job.