Jack Lew: Architect of Fake Spending Cuts, Defender of Entitlements


Later today, President Obama is expected to nominate Jack Lew, the current White House chief of staff and former administration budget director, to run the Treasury Department. In that role, he'll be the administration's point person on issues relating to the budget and economy, and he'll oversee a series of sure-to-be fractious showdowns with Republicans over debt and deficit issues. In the battle over the budget, Lew will be Obama's top general.

The case for Lew's nomination is based largely on his experience and closeness with the president: He's 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 later as the Office of Management and Budget chief at the end of Bill Clinton's second term. He's a budget super wonk who is closely in sync with President Obama's agenda. He's also as close to a liberal hawk as you're likely to get; Lew presided over the surpluses of the Clinton years, and argued at the time that fiscal discipline is necessary to achieve liberal policy goals. One softly suggested liberal criticism of Lew currently making the rounds is that he might actually be a bit too concerned about the deficit.

I don't think they have much to worry about. Lew is a diehard, lifelong defender of the big-ticket entitlements that are the largest drivers of our 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 has helped the Obama administration sell fake spending cuts during the 2011 debt limit fight. 

Durign the Clinton era, Lew sold deficit-hawkery 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 issue of immense passion for Lew; under O'Neill, he helped broker a 1983 Social Security deal. Former GOP Senator and Budget Committee Chair Judd Gregg told National Journal last year that Lew's priorities are protecting Medicare and the larger social safety net from change. He's known as an even-tempered individual, but during the 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 Bloomberg News. "We're not doing that." 

The eventual deal to raise the limit didn't cut Medicaid. Instead, it bought Republican support with a package of pretend spending cuts—cuts that Lew helped put together with the intention of giving Republicans a topline number that wouldn't actually result in real spending cuts. As Noam Scheiber reports in The New Republic:

Lew was able to produce a "headline" number that was large and pleasing to the GOP but ultimately rather meaningless: He'd conjured up cuts to piles of money that weren't going to be spent anyway, and handed them over to Republicans wrapped in pretty little bows. "Boehner and his guys got snookered by [Obama congressional affairs liaison] Rob Nabors and Jack Lew," a senior White House official told me.

So the White House got a deal without giving up anything it considered important, and the GOP got, well, "snookered." It's a story that tells you a lot about why some Republicans in Congress—House Speaker John Boehner in particular—seem to dislike Lew so intensely.

It also suggests how averse Lew is to any kind of spending cuts. That aversion was driven home in a 2011 op-ed for The New York Times in which Lew 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 oh-so-critical Great Lakes Restoration Initiative. The total value of those cuts? Just $775 million. These are only some of the $20 billion in annual cuts Lew says the administration has proposed, but his point is to highlight the grave difficulty of even minor cutbacks. It's a view that seems to see any reduction in federal spending, no matter how small, as an act of savagery.

At a time of record deficits, unsustainable debt, and sky-high federal 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: Someone who is determined to avoid cuts to the entitlements that are the chief drivers of the long-term debt and deeply resistant to cutting even the tiniest bit of spending in the short term. It's a decision that says plenty about the administration's intentions on budget policy. And it's a telling reflection of how the president himself views our current budget problems: Lew is said to be almost entirely in sync with the president's views and values on budget policy. Obama, like Lew, may sometimes talk up the need to get the nation's fiscal house in order. But he'd rather protect federal spending than find ways to cut it.