High-stakes family disputes sometimes find themselves in the public Peter Orszag child support spotlight and illuminate some of the more intricate principles of family law. The Orszag child support case is such an instance, which gives unprecedented insight into how courts treat requests for child support modification when one parent experiences a drastic change in financial circumstances.
The case presented by a former government official high in the hierarchy and a very successful corporate executive shows the delicate balance between the income of parents, their children’s needs, and the legal requirements of changing existing support agreements.
This article seeks to provide a well-rounded view of the Peter Orszag child support dispute. It goes into the background of the protagonists, the positions of the parties considering the arguments, and the court’s decision. The broader implications of this case in understanding the financial changeability of child support and the framework of laws applicable to it are also discussed.
Background of the Case: From Public Service to Private Sector Wealth
To understand the crux of any legal conflict, it is of relevance to know who the key players are and the context of these players’ financial status.
Who is Peter Orszag?
Peter Orszag is a prominent American economist and business executive who has served in key government and private sector roles. He operated as Director of the Office of Management and Budget for the Obama administration from 2009 to 2010, before that serving as Director of the Congressional Budget Office. His career in public service has made him one of the most respected names in economic policy.
Time reports that Orszag landed a hefty paycheck as soon as he left the White House: Citigroup bestowed upon him an executive-on-high position, causing a dramatic rise in his income. His salary reportedly jumped from government pay of around $145,000 annually to an expected income of nearly $4 million per year. This radical change in income grew to be the central issue in the child support dispute.
The Marriage and Initial Divorce Agreement
Peter Orszag married C.-M. Kennedy from 1997 to 2006, and they had two children. Following divorce proceedings, a child support agreement was set up in the year 2008. The initial agreement was based on their joint financial circumstances at the time. Orszag was committed to establishing a trust for the children’s school tuition and other major expenses, whereas the parents would somehow share costs for childcare and vacations.
Child Support Modification: The Legal Battle
In 2012, just two years after Orszag visited Citigroup and his wealth exploded, Cameron Kennedy submitted a petition to modify the child support agreement. She cited the significant transformation in Orszag’s financial condition and sought a sharp increase in independent direct monthly child support payments.
The Heart of the Dispute
Kennedy’s legal team argued that the children were entitled to a standard of living commensurate with their father’s newfound wealth. They requested the amount for child support payments to be approximately $22,000 to $25,000 per month.
The argument was based on the principle the support for the child should be reflective of the parents’ financial realities, thus ensuring that children benefit from both.
Orszag’s legal team put up a very stiff opposition to this request. They maintained that the present arrangement was in more than sufficient form to give the children an enviable lifestyle.
Kennedy’s request was adduced as “backdoor alimony” by his lawyers, suggesting the funds were not to meet any needs for the children but were simply a way for his ex-wife to try to cash in on his higher earnings.
They also pointed out that Kennedy herself was a high-earning person, earning roughly $350,000 a year in a job at the consulting firm McKinsey. They contended that she could comfortably care for the children without any dramatic increase in support payments.
A key procedural battle in the case for child support was about Orszag’s effort to seal his financial details from public view. Unfortunately for him, the court ruled against him, on the verge that his income happened to be a central and pertinent fact in this case whereby its information must be in the open.
The Court’s Decision and Rationale
It was in July 2014 when after a grueling two years of fighting, the D.C. Superior Court delivered its decision. It emphatically denied Cameron Kennedy’s request for a large increase in direct monthly child support payments. The judge’s ruling in a 64-page opinion described her insistence upon receiving monthly payments as rather curious.
Instead of awarding direct cash payments to Kennedy, the court structured a different kind of support arrangement. Peter Orszag was ordered by the judge to be directly responsible for “the entirety” of several key expenses for their two children.
This includes:
Private School Tuition: Fully covering costs estimated at $34,000 per year for each child at the time.
Summer Camp Costs: For their summer camps.
Unreimbursed Medical Expenses: For all medical expenses unpaid by insurance.
Extracurricular Activities: For their private sports coaching and other fun activities.
The court also ordered Kennedy to pay her own significant attorney’s fees.
In reasoning, the court pointed out that both parents are high earners and that the children were already living “the lifestyle befitting the children of wealthy parents” in both homes.
The judge was quite direct: “Ms. Kennedy is also a high-earning party, capable of providing a more than comfortable lifestyle and many advantages for her children, even in the absence of any assistance from Mr. Orszag.”
The court suggested that forcing direct payments between two highly contentious co-parents would likely incite more conflict to the detriment of the children. By ordering Orszag to make direct payments for expenses, the court shielded the needs of the children from possible disputes concerning cash payments.
Broader Implications: Monetary Changes in Child Support
The Orszag child support case serves as a case study for any issue involving the modification of child support. It reveals several key ancient precepts and practical considerations.
What is a “Material Change in Circumstances”?
In family law throughout the United States, the vast majority of the time a modification to child support must reflect a “material” or “substantial” change in circumstances. These changes can be an increase or decrease in either parent’s income, changes in the needs of children, or changing custody arrangements.
The increase in Orszag’s income-about 2,600% or so without a question-was material. The issue was not whether there was a change but what kind of change in the child support order should come about because of that change. The result shows that just because the paying parent has a huge income increase does not mean that the receiving parent automatically gets to share in it in a commensurate direct cash increase, especially when the receiving parent happens to be quite high-earning.
Children’s Needs versus Luxury Lifestyles Peter Orszag Child Support
Child support is there to meet the reasonable needs of a child, such as housing, food, clothing, education, and health care. In higher-income cases, the meaning of needs usually expands to include things such as private school, international travel, and very costly extracurricular activities, all of which are intended to give the child a taste of the parents’ financial success.
However, the courts also keep an eye out for child support requests that seem to be thinly veiled spousal support requests or a diversion for the custodial parent’s lifestyle.
The Orszag ruling showcases the court scrutinizing the true needs versus the true lifestyle of the children and concluding that these needs could be fulfilled through direct payment of expenses rather than a vice versa large cash-day payment to the other parent.
Judicial Discretion in High-Income Cases
Most states have child support guidelines that use a formula to determine payments based on parental income. However, those formulas generally have an upper limit or become advisory rather than mandatory after parental income exceeds a certain threshold, such as a combined income of $250,000 or $300,000 each year.
In cases like Orszag’s, judges enjoy a large degree of discretion. They may depart from the standard formulas and develop creative solutions that they feel best meet the children’s interests. The Orszag court’s direct payment of specific expenses is an illustration of judicial discretion in practice: support the children’s lifestyle while avoiding what the court sees as a potential backdoor alimony.
Conclusion: Its Lessons within an Extremely High-Stakes Case
The Peter Orszag child support battle illustrates well many concerns that bear on family law within the extreme wealth dynamic. It reinforces that while a parent’s income is an important factor, other factors matter: The other parent’s income; the established lifestyle of those children; and all potential sources of conflict between their parents.
This case also reminds us that a request for modification of child support must be backed by a serious legal argument. It is not enough to simply show change with respect to financial conditions surrounding child support obligations; a party must show how the change affects the needs of the children and why the proposed amendment is the best and fairest solution.
With that in mind, for persons in higher brackets, this child support situation outcome suggests a bias from the courts to set up arrangements moving funds directly toward those particular expenses that pertain to the child as opposed to making large cash payments to one party or the other involving very little structure for kids’ benefit, especially where both parents command considerable financial resources.
