Orszag told an audience at the Brookings Institution, a Washington think-tank, that failing to take real steps toward closing the record US budget gap would do as much harm to the economy as withdrawing fiscal stimulus now.

"It would be foolish to dramatically reduce the deficit immediately, because that would choke off the nascent economic recovery. But it would be equally foolish not to reduce the deficit significantly by say, 2015, because that would imperil continued economic growth at that point," he said.

In his last public speech before stepping down as head of the White House Office of Management and Budget on Friday, Orszag also reiterated the administration's determination to let Bush-era tax cuts for wealthier Americans expire on time at the end of this year.

President Barack Obama wants to renew tax cuts delivered by his predecessor, George W. Bush, for couples earning less than $250,000, but has said the country's grave fiscal position means it cannot afford to extend this break to richer Americans. The expiration would lift the top rate of US income tax to 39.6 percent from the current 35 percent.

Obama, who has named OMB veteran Jack Lew to replace Orszag, has used deficit spending to help the US 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.

Orszag acknowledged this was a frustratingly tough story to tell in an election year, with polls showing Americans worried about high unemployment and Obama's Republican opponents loudly complaining the country cannot afford his economic remedies.

"The right combination is more fiscal discipline in the medium and long-term and more support for the economy in the short term — and both sides (of the debate) need to acknowledge that," Orszag said in response to a question.

"I'm somewhat frustrated by the way the debate has evolved because it is almost like it is either one or the other when we need both, and it is all a question of timing," he said.

Republicans have made the deficit a clear plank of their campaign for the Nov. 2 midterm congressional elections, in which all 435 seats in the House of Representatives and 37 of the 100 seats in the US Senate are up for grabs.

The White House projects a record $1.47 trillion budget deficit this year, or 10 percent of US 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 nations summit in June.

Investors have given Obama the benefit of the doubt on his long-range budget goals and have continued to buy US government bonds, holding yields historically low.

Orszag said this reflected a strong preference among investors for the safety of US sovereign debt, and yields would probably rise as investors shifted their money back toward the private sector.