“America’s possibilities are limitless,” President Barack Obama told the country during his second inaugural address. And so, one got the sense, was his agenda. In February, during his State of the Union address, Obama began to flesh out the details: tax reform, pruned-back entitlement payouts, an increase in the minimum wage, tens of billions in new infrastructure spending, perhaps even a stab at a long-elusive “grand bargain” to steady federal finances into the future.
The two speeches made it clear that Obama’s second term, like his first, would focus on domestic policy, with a handful of big-ticket reform items competing for attention against a backdrop of continuous haggling over the size and shape of the federal budget. Along the way, he will rely on an economic team that has been almost completely overhauled since he first took office.
Who are the president’s top wonks? At first glance, they’re a bunch of ex-Clintonites steeped in Third Way centrism and deficit hawkery. But a closer look reveals something else. The keepers of Obamanomics 2.0 are above all political appointees designed to defend a status quo that has very little to do with the comparative golden years of Bill Clinton.
The Paper Deficit Hawk
In theory, Jacob “Jack” Lew is the deficit hawk’s best friend in the administration. As White House budget director from 1998 through 2001, Lew presided over the Clinton surpluses. During that time, he repeatedly insisted that fiscal discipline was necessary to achieve liberal policy goals. Indeed, Lew was so adamant about the need for budget restraint that when he was nominated for the top spot at Treasury this year, some liberals quietly grumbled that he might be too concerned about the deficit.
They don’t have much to worry about. It’s true that Lew spent much of his career managing highly charged budget negotiations, first as an aide to Democratic House Speaker Tip O’Neill in the early 1980s and under Clinton. But Lew has always viewed budgets as messaging first, math second. The budget, he once wrote, is “not just a collection of numbers, but an expression of our values and aspirations.” Elsewhere he has described budgets as “a tapestry, the fabric, of what we believe.”
It’s clear enough what Lew believes about the current budget. He’s a lifelong defender of the big-ticket entitlements that are the largest drivers of the nation’s long-term debt, a true believer in the goodness of government who agonizes over even the tiniest program cuts, and a budgetary sleight-of-hand artist who helped the Obama administration sell fake spending cuts during the 2011 debt limit fight.
Under Clinton, Lew sold surpluses as a way to preserve the welfare state: “Fiscal discipline is essential to protect Social Security and strengthen Medicare, so that both will be there in the years ahead,” he told Congress in 2000. Entitlements have long been a key issue for Lew; under O’Neill, he helped broker a bipartisan deal to reform Social Security financing in 1983. In 2012, former GOP senator (and Budget Committee chair) Judd Gregg told National Journal that Lew’s top priority is shielding Medicare and the rest of the entitlement firmament from change.
The mere mention of entitlement cuts has been known to drive the reportedly even-tempered Lew into fits of rage. During the summer 2011 debt limit negotiations, he reportedly lost his cool when the subject of reducing Medicaid spending came up. “No!” he yelled on a conference call with colleagues, according to a report by Bloomberg News. “We’re not doing that.” Eventually, Lew reached an agreement with Republicans that raised the federal debt limit but did not cut Medicaid.
In an April 2011 budget negotiation, Lew helped buy Republican support with a package of “cuts” to spending that either never was going to happen in the first place or already was scheduled for the chopping block. As an anonymous senior White House official bragged to The New Republic in January, “Boehner and his guys got snookered” by the empty cuts Lew helped cook up.
The result was that the White House got a deal on a continuing resolution for the 2011 fiscal year without giving up anything it considered important, and the GOP got, well, “snookered.” It’s a story that helps explain why some Republicans in Congress—and House Speaker John Boehner in particular—seem to dislike Lew so intensely.
It also suggests how averse Lew is to any significant spending cuts. That aversion was driven home in a 2011 New York Times op-ed in which he described the “tough choices” that would be necessary to get the nation’s fiscal house in order. “Make no mistake,” he wrote, “this will not be easy.” In order to illustrate how hard it would be, Lew singled out cuts the administration had made to community service block grants, a separate community development fund, and the Great Lakes Restoration Initiative. The total savings from those allegedly tough choices? Just $775 million. With an “m.”
Lew used those as examples of the $20 billion in cuts he said the administration had proposed; the point was to highlight the grave difficulty of even the most minor budget trims. It’s a view that equates any reduction in federal spending, no matter how small, with an act of savagery.
As the federal government continues on an unsustainable debt trajectory driven largely by the unchecked growth of entitlement spending, this is who the president has chosen for a position that The Washington Post describes as the administration’s “leading spokesperson for the economy,” as well as its senior advocate in the budget negotiation process.
Lew’s elevation to the top spot at Treasury says plenty about the administration’s intentions on budget policy. He will be the administration’s point person on issues relating to the budget and economy, the strategist and negotiator tasked with overseeing the sure-to-be fractious showdowns with Republicans over debt and deficit issues. In the battles over the budget, Lew will be Obama’s top general.