Peter Orszag beats the child support rap

Back in March I wrote a post with some details about former Obama Administration official Peter Orszag, whose ex-wife had hoped to tap him for $264,000 per year in tax-free child support revenue. Backstory: following a brief marriage, about 10 years ago, Cameron Kennedy got a luxurious house and a few million dollars in cash by suing Orszag for divorce and, as part of settling that lawsuit, signed an agreement that they would split the children’s expenses going forward (she may have earned more than he did at the time, though now he is cashing in from our revolving door system between government and finance). The judge has ruled and it seems that Cameron Kennedy will get two free kids, with the father paying for all of their private school tuition, summer camps, medical expenses, and extracurricular activities. But she won’t be able to turn a cash profit on the children. In fact she will have to provide them with at least some meals on at least half of the days of the year, paying for the food out of her $350,000 per year income, mostly from working at McKinsey. (She also has to give them a place to sleep, but I am pretty sure that is in a house that got as part of her divorce lawsuit.) She has to pay her own attorney’s fees, according to the Washington Post. And the judge refused to accept the idea that $350,00/year was right at the poverty line:

“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 ruled Thursday.

More: Read the Kennedy Decision (64 pages)

4 thoughts on “Peter Orszag beats the child support rap

  1. Many of these disputes are fueled by the woman’s irrational desire for revenge (and a desire to maintain “control”) more than any financial impetus. Orszag agreed up front to pay for the kids’s private school tuitions (that alone would be around $70K per year) plus various other expenses (which probably add up to another $70k), so the total amount in dispute was maybe $100K/year (for a man who is making $4M). I’m sure that if they had agreed to split the difference ($50K is not even a rounding error for Orszag in his present circumstances), this could have been settled in around five minutes and minimal legal fees. But the ex-wife was clouded by rage and couldn’t think clearly and now she doesn’t get the split and has a hefty legal bill to pay. Possibly her lawyers encouraged her maximalism by telling her they would win for sure. With luck, she will stiff them on their legal bill or at least take a long time to pay.

  2. Izzie: Would you say that a person who goes to work every day in order to earn $264,000 per year after taxes has a “desire for revenge” or is “clouded by rage”? How about a person who pursues the opportunity to get $264,000 per year, tax-free, to do something that he or she is already doing? (e.g., putting hot dogs on the table every other evening for a 10-year-old) Are people who start companies and work to make them successful “clouded by rage”? Most of them don’t end up netting anywhere near $264,000 per year.

  3. PS I this was a business plan by Mrs. O it was a lousy one – she didn’t get the $264k/yr. In fact she ended up out of pocket after legal expenses. Anyone else who is thinking of pursuing this “business” must consider the risk that getting $264k/yr is not a sure thing and in the meantime to have to take care of the kids for 18+ years.

  4. The marriage was long enough (1997-2006) that as Philip surmised, the cash payout in the divorce settlement was sufficient to purchase one-half of an upscale (worth over $1.5 million now) home, with the other half owned by a family trust controlled by Donald Kennedy, Cameron’s stepfather, who at one point was president of Stanford University. The plaintiff invested most of the remaining cash from the divorce settlement, and admitted to being able to save at least $10,000 per year from her McKinsey salary . Her net assets have increased steadily during the years since the divorce. Nonetheless, Kennedy claimed under oath that she was unable to afford repairs to her home (A/C as well as some drainage issues affecting the foundation). Much of what the judge wrote in the 7/10/14 ruling suggests he found Kennedy lacking in credibility.

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