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Go Home When It Comes to Worldview, Jack Lew is Obama in Coke-Bottle...

PLANK JANUARY 9, 2013

When It Comes to Worldview, Jack Lew is Obama in Coke-Bottle Glasses

BY NOAM SCHEIBER

Two years ago I was interviewing Tim Geithner when he started ticking off the ways he was poorly suited to being Treasury secretary late in Obama’s first term. Above all, he said, was the fact that the job was increasingly focused on questions of values and ideology—how the government should spend its scarce resources, who should get the shaft and who should pick up the tab—whereas Geithner saw himself as a financial technocrat. “A huge part of the economic challenge the president faces on this stuff is that it’s going to be at the center of the political debate,” he told me. “You could argue—and I’ve made this argument in the past—you want somebody in this job who can bridge the political world in a different way than I can.”

By nominating Jack Lew to succeed Geithner, it may look like the president has substituted one technocrat for another. Lew is a two-time White House budget director and 30-year Washington veteran whose formative professional experience was helping Tip O’Neill bring Social Security into actuarial balance in a deal with Ronald Reagan. (He was all of 27 at the time.) 

In fact, Lew has a well-deserved reputation for homing in on the values that lurk behind the numbers. Progressives in and out of government in the late 1990s recall him as one of the key defenders of Medicare and Medicaid from the designs of axe-wielding Republicans. “There was no bigger supporter,” one liberal policy maven told me. “He saved Medicaid.” More recently, as a top Obama emissary to the deficit negotiations of the last few years, he’s been dogged in his insistence that Democrats won’t entertain the tiniest pinprick to these programs unless Republicans put revenue on the table.  

That, I’d guess, is half the reason Republicans have reservations about him (at least to the extent their reservations are sincere rather than a crass play for leverage). The other half is that Lew is just plain effective. During Obama’s first confrontation with the House GOP in early 2011, John Boehner’s troops were bent on lopping $100 billion off Obama’s budget request for that year, an eye-popping sum to squeeze out of a weak economy. Obama, with Lew as his chief negotiator, eventually compromised at $78 billion, which looked at first like a massive concession, but was a pretty favorable outcome once you read the fine print. As it happened, 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 while I was writing a book on the subject. “We protected what we wanted to protect.”  

Perhaps not surprisingly, GOP leaders have repeatedly petitioned the White House to send someone other than Lew to join them at the bargaining table. Which points to at least one reason to love his nomination: It’s an instance of Obama emphatically not allowing Republicans to choose their negotiating partner, a rule he hasn’t always observed.  

Whatever the indigestion on the right, though, there’s no remotely coherent reason for the Senate to block Lew, and I suspect he’ll be confirmed by a wide margin. The longer-term threat to his tour as Treasury secretary could be grumbling on the left. This may be counterintuitive given his progressive credentials. But there’s a special sense of contempt people reserve for fellow travelers they feel may betray them, and it turns out Lew simply isn’t someone who believes Medicare and Social Security are untouchable. To the contrary, he was very much a proponent of pruning Medicare during the 2011 back-and-forth, at least if the GOP reciprocated with equally painful concessions. Among other things, Lew argued internally for ideas like raising the program’s eligibility age, something that makes the hair stand up on the backs of liberals’ necks, and which prompted much hand-wringing among some of Obama’s advisers. (I have details on the debate in my book.) Some liberal budget activists even whispered conspiratorially that Lew’s two years at Citigroup had changed him, though this seems a stretch given that Lew spent his days there keeping an eye on the books, not consorting with masters of the universe. (Which is not to say a liberal wonk didn’t have better things to do in 2007 than toil for a bank trying its damnedest to blow up the world.)

For the record, I’m someone who thinks the Medicare changes Lew has supported are lousy ideas. More broadly, I worry that Lew may be too romantic about the virtues of a deficit grand-bargain to walk away from a bad deal. But I think liberal criticism of this sort is a bit misplaced. Because to the extent these flaws may characterize Lew’s tenure at Treasury, they’ll say less about him than the man who’s hiring him. “[Lew] has serious commitments to traditional causes …  but at the same time believes you need to have a solvent government,” a former administration colleague told me. “It always struck me as the Obama approach.” 

Simply put, the president is getting the Treasury secretary who most closely reflects his thinking about the size, shape, and role of the state (something that, by the way, seems increasingly true of his second-term cabinet writ large). However that works out, it’s all on Barack Obama in a pretty deep and inescapable way. Which, in the end, is as it should be.  

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35 comments

"Lew is a two-time White House budget director and 30-year Washington veteran whose formative professional experience was helping Tip O’Neill bring Social Security into actuarial balance in a deal with Ronald Reagan. (He was all of 27 at the time.)" Shit, Lew is the bastard who betrayed every working American!

- rayward

January 9, 2013 at 6:24pm

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And showed about as much judgment as a horny teenager!

- rayward

January 9, 2013 at 6:29pm

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If Scheiber is right, Obama is a fool! No, a damn fool!

- rayward

January 9, 2013 at 6:37pm

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NUTS. We need this? Nothing against Lew, since I never met him (nor voted for him) but, did we stand in line to vote for a President who doesn't think we need unions, Social Security, Medicare, etc? I think not. Also, I don't like the sound of "made a deal with Ronald Reagan." At all. This is when our troubles began - in the Reagan Administration.

- Sophia

January 9, 2013 at 6:50pm

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On that score: to a person "on the ground" one went from doing pretty well to being practically broke almost overnight, and blamed it on the weather, demographic changes in the community within which one was working, so forth. NOT. This was down to bad economic policy, recession, skyrocketing oil prices, everything but the damn weather apparently and also, did I mention greed? Here's one little example from my personal corner of the universe: club owners decided they could make more money with records than with live musicians, so... I gotta write a book.

- Sophia

January 9, 2013 at 6:54pm

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looking forward to finding out how much money Jack Lew made during that stint at Citi where his role was with a fund that bet on the housing market implosion. It is possible that Elizabeth Warren will be Lew's fiercest critic. I hope so. Dodd-Frank is still in need of reform. Makes the new boy's club complete, too. Bonus: now those who think the Jews run the banks won't have to pretend the SecTreas is Jewish. Now I can go back to reading Sheila Bair's book "Bull by the Horns", to better understand the financial meltdown of 2008, and Citi's key role in it.

- K2K

January 9, 2013 at 6:56pm

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Jacob Lew is an Orthodox Jew. For a rabid anti-Semite devoted to the destruction of Israel and the entire Jewish people, Barack Obama sure does nominate a fair number of Jews to important positions. Very sneaky, Prez. Lulling them into a true sense of security! That's long-term thinking for you.

- DC Spence

January 9, 2013 at 7:12pm

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just want to note that Sheila Bair, r, endorsed Elizabeth Warren for the Senate, for two main reasons: they have worked together in the past, and Bair thinks there should be more women in office.

- K2K

January 9, 2013 at 7:17pm

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By the way, Jacob Lew is hardly a traitor to the working man. He probably doesn't remember what it is like to be a true working man, but the fact that he's willing to cut a deal on entitlements should not be a problem. Entitlement reform is going to happen sooner or later -- our aging population and devotion to large military budgets will make sure of that. What matters is not that a deal get done, but that it contain enough concessions from the other side to make it worthwhile. Lew is a hard bargainer. Any deal he makes with the GOP on entitlements will be at least as painful for the bad guys as it is for the good guys. Better to have a "Grand Bargain" struck with a Democrat in the White House than a Republican, when it would be more like a "Grand Ultimatum."

- DC Spence

January 9, 2013 at 7:19pm

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$2.7 trillion in working American taxes, pissed, gone forever, that's Lew's legacy. Pissed, gone forever. He's the pissed, gone Treasury Secretary.

- rayward

January 9, 2013 at 7:28pm

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Lew isn't the problem and won't be, any more than Biden was the one who made the cliff deal. It is Obama. Period. He doesn't understand economics and has no one who is not beholden to the same financial interests -- read Summers, Geithner, Lew -- to explain things to him. Fundamentally, Obama believes the Republican economic fantasy story about the way the economy and the Federal budget function. Obama believes that we are too poor to afford retirement income security and health security. Will Lew tell Obama anything that Obama doesn't already believe? I doubt it. I doubt he ever has. But he will still be better than Geithner whose brain is owned by Goldman Sachs, maybe sitting in a tank at Goldman headquarters will instructions get wired to his body via the Matrix.

- roidubouloi

January 9, 2013 at 7:48pm

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Sure, "Obama believes the Republican economic fantasy story about the way the economy and the Federal budget function. Obama believes we are too poor to afford retirement income security and health security." That's why it's called Obamacare -- 'cause he's just another Republican. Anyone who has paid attention the last four years can see there is basically no difference between them.

- DC Spence

January 9, 2013 at 9:56pm

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I didn't say there is no difference between Obama and the Republicans. I said Obama believes the Republican narrative about the way the economy and public finance work, that, for example, Treasury debt is spending in the present at the expense of the future, or that "we," as a nation, cannot afford minimal retirement income and/or necessary healthcare, neither of which is remotely the case. Oh yes, he does believe these things, and nothing about Obamacare says otherwise.

- roidubouloi

January 9, 2013 at 11:10pm

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Things are back to normal. The Democrats are back to bitching about President Obama.

- Sophia

January 10, 2013 at 12:23am

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As to Obamacare: the insurance companies are raising rates sometimes by double digits? In 2000 pages of this bill nobody put a clause limiting the degree to which insurance companies could jack their rates? Now that people must have insurance, how are we going to afford it? Is the government going to have to eat the difference or what? Instead of "reforming entitlements" we need to reform the insurance industry and also, curb the cost of medical care which is out of control. It isn't Medicare, it's the cost of care period.

- Sophia

January 10, 2013 at 12:26am

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Exactly right, Sophia.

- roidubouloi

January 10, 2013 at 12:37am

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Since Scheiber wrote the sentence I quote (see the first comment above), I should ask Scheiber whether he actually believes the sell-out of working Americans "saved" social security and brought it into "actuarial balance". Before he answers, I should remind him that the "deal with Ronald Reagan" turned millions of ordinary working Americans into tax protesters and Republicans and is largely responsible for Republican gains in Congress and, likely, George W. Bush. And what did we get in return? An insolvent social security "trust fund", which holds a $2.7 trillion government IOU ("a piece of paper in a file cabinet" according to George W. Bush) that can be repaid only by further government borrowing, borrowing at a time when the government already owes trillions and the costs of borrowing are likely to be much, much higher than today; indeed, my prediction is that the IOU will not be repaid and, instead, we will get another whopping increase in regressive payroll taxes to "save" social security - that's the accepted wisdom of DC elites, from Bowles-Simpson and across the political spectrum. If that's Lew's "formative professional experience", what will he do to working Americans as an encore?

- rayward

January 10, 2013 at 7:03am

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Roi: "Lew isn't the problem and won't be, any more than Biden was the one who made the cliff deal. It is Obama. Period. " Agreed Sophia: "Things are back to normal. The Democrats are back to bitching about President Obama." Are you? If not, why not? And if so, now that he's elected, what is the plan to deal with the problem?

- drofnats1

January 10, 2013 at 9:53am

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"For the record, I’m someone who thinks the Medicare changes Lew has supported are lousy ideas. More broadly, I worry that Lew may be too romantic about the virtues of a deficit grand-bargain to walk away from a bad deal. But I think liberal criticism of this sort is a bit misplaced. Because to the extent these flaws may characterize Lew’s tenure at Treasury, they’ll say less about him than the man who’s hiring him." Yes, it comes down to Obama. But Obama's perspective is partly a product of the perspectives and advice he gets from the people around him. It's a two-way street. I'm much more concerned about Lew's nomination after reading this piece than I was beforehand.

- Thunderroad

January 10, 2013 at 11:01am

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"Bonus: now those who think the Jews run the banks won't have to pretend the SecTreas is Jewish." K2K, you do realize Timothy Geithner is Jewish, don't you? The Alex Jones crowd hasn't had to pretend the SecTreas is Jewish since 2009.

- wildboy

January 10, 2013 at 11:17am

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"I should remind him that the "deal with Ronald Reagan" turned millions of ordinary working Americans into tax protesters and Republicans and is largely responsible for Republican gains in Congress and, likely, George W. Bush." That's a bit much, isn't it Ray? Plenty of ordinary working Americans turned into tax protestors in the mid-to-late 1970's, especially with Prop 8 in California and similar movements nationwide. And Reagan's 1981 tax cuts were quite popular with a broad section of the ordinary American working class when they were passed, since the notion that high income tax rates were holding back the economy became something like de fide dogma during the mid-to-late 1970's. Tax hatred was well established in the American mainstream before your bete-noire, the payroll tax hike and SS amendments deal, came along in 1983. And I would respectfully suggest that it was a focus on income taxes, rather than payroll taxes, that was behind the Bush tax cuts -- unless I'm missing something, there wasn't a whole lot of talk about payroll tax rates during Bush's first (or second) term. There's an argument to be made that the focus on income tax rates, stemming from Reagan and conservative tax policy from the mid-1970's onward, managed to succeed and sustain itself through a misguided working-class focus on income taxes at the expense of regressive payroll taxes; but that's mistaking consequence for cause.

- wildboy

January 10, 2013 at 11:25am

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Drof: OF COURSE I am complaining about President Obama. Dear President Obama, if you are reading this please consider yourself bitched at. wildboy, to the best of my knowledge Geithner isn't Jewish, he was raised Episcopalian, which doesn't keep people from declaring he is One Of Those Greedy Jews Who Are Controlling Our Wallets, like Ben Bernacke, Morgan Chase, etc.

- Sophia

January 10, 2013 at 12:00pm

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Oops, Sophia, right you are. I may have been thinking of his wife, who is of Jewish descent although they were married in a United Church of Christ ceremony. Anyway, it's not like Jack Lew would be the first Jewish Treasury Secretary -- there were those Rubin and Summers characters under Clinton, as well as that Morgenthau guy back in the 1930's. And don't even get me started on W. Michael Blumenthal.

- wildboy

January 10, 2013 at 12:28pm

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Lew sounds like the consummate political yes-man, with not much to offer in the way of economic or financial expertise, notwithstanding stints as Budget Director. That means his job will be to say yes to whatever he discerns Obama's economic/financial/political thinking to be, just as this article implies by its title. Obama lacks any depth on such matters -- not only does he appear to believe the Republican economic narrative, but seems to think that "common sense" allows him to understand such matters. That is almost on a par with believing that common sense allows one to understand quantum mechanics -- a lot of understanding quantum mechanics, finance, and macroeconomics is the realization of just how little service common sense is. With Lew being but an extension of Obama at Treasury, one wonders where Obama is going to be turning for financial and economic expertise. If not a source of technical advice on finance and economics, the Treasury Secretary ought to have the credibility to keep Wall Street and the banks in check. Does Lew even understand Wall Street because he spent 10 minutes at Citigroup? I don't think so. Basically, Lew at Treasury is an empty seat. Alan Krueger, the Chairman of the Council of Economic Advisers, is a distinguished labor economist. I don't know that that is the right pedigree for the current set of economic battles, although income distribution is the biggest economic issue facing the country. But I think he is more micro. We hear so little about him that one wonders whether he has any clout. Who in the administration is there to help Obama understand the economic consequences of the political deals he so enjoys making with the Republicans?

- roidubouloi

January 10, 2013 at 12:31pm

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MY has an interesting observation about Lew. MY says the Republicans object to Lew because Lew is a numbers guy and the Republicans can't get away with the usual Republican flim flam when it comes to budgets and taxes; indeed, according to MY, Boehner tried to keep Lew out of the room during the 2011 negotiations for that reason. I say interesting observation for two reasons. One, it doesn't say much for Lew's boss, or more accurately, the Republicans' perception of Lew's boss. Two, Lew being the numbers guy, all the numbers in the deal he crafted with Reagan in 1983 added up, so Lew was more than satisfied and blessed it. But the problem with the deal wasn't that the numbers didn't add up; the problem with the deal was that the numbers added way, way, way up, with all that excess cash in the social security trust fund too tempting for the Republicans (and Democrats) not to pilfer. Now, if Lew came away from that "formative professional experience" with the lesson that it isn't always about whether the numbers add up but the consequences to the groups that aren't represented by expensive lobbyists, then Lew is the right man for this job. If Lew continues to believe that the numbers still add up in the 1983 deal, then ordinary working Americans are in trouble again.

- rayward

January 10, 2013 at 12:59pm

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Some perfectly fair and astute observations Roi, but I think it's a big plus he's not from Wall Street - there's the message, at least one anyway, being sent with the appointment. I like that both Obama and Lew have little interest or affinity with Wall Street. Lew does *not* make it an empty seat, the regulatory capture of the last 20 years made that an empty seat long ago. The smoke and mirrors of Wall Street finance is not hard to understand as you know, so the idea that we absolutely must have someone in that slot who can supposedly understand the rocket science of it all (i.e. = give us power) has always been amusing. The cat is out of that bag now so all of those ridiculous BSD's can sit with their hand in hand outside the President's office like the rest of us for awhile.

- WandreyCer

January 10, 2013 at 1:16pm

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"Dear President Obama, if you are reading this please consider yourself bitched at." Oftimes the comment threads here far outshine the article. And Soph is one of the stars.

- Tristan

January 10, 2013 at 1:52pm

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It is not about understanding the rocket science, wandrey, it is about having the credibility to say to the always greedy and self-serving Wall Street guys that something is bullshit, and you know it, and you know that I know it, so don't bother. They can and do blow endless smoke. One role of the Treasury Secretary is to be able to stand up to them. If he can't do that, and he has no great insight to bring to public finance or macroeconomics, then I suppose he can make sure the mint is operating efficiently.

- roidubouloi

January 10, 2013 at 3:23pm

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Treasury has a huge regulatory mandate from Dodd-Frank, and Lew admits he is not into those thickets, and has no direct experience. Treasury has the key role in enforcing sanctions that relate to banks,, e.g., Iran's Central Bank. Just prefer that the SecTreas during '2013: The Iran Year' is a Hindu or Methodist or Mormon :) Thanks Sophia, for noting Geithner is not Jewish. The RonPaulbot attacks on the Fed during the primaries were always prefaced by "the Fed is secretly owned by foreign (Rothschild) bankers". When I Google 'Sheila Bair news', Google still pops up 'Sheila Colleen Bair Jew'. Google actually does run the world these days! yes, founded by two Jews. oy.

- K2K

January 10, 2013 at 5:29pm

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Well OK Roi - I don't care if Lew has credibility with Wall Street - neither does America or President Obama. Wall Street doesn't even have credibility with Wall Street. So who exactly cares what they say? No one that matters right now, which is a nice change of pace. Temporary I'm sure, but much deserved. They have no credibility in financial matter with ANYone.

- WandreyCer

January 10, 2013 at 6:28pm

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As has been commented, Jack Lew is a loyal implementer for Obama. Same can be said for Hagel (Defense), Brennan (CIA), and Kerry (State). Obama doesn't seem to want expert outsiders. He's made up his mind about policy. He will compromise with and cut deals with the Republicans and the Islamists.

- amidut

January 10, 2013 at 7:14pm

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http://nationaljournal.com/whitehouse/is-jack-lew-a-friend-to-wall-street-20130110 Michael Hirsh has a detailed assessment of why Wall Street is happy enough with Lew. Quite a good, detailed, informative read. Now that Sen. Sanders has said he opposes Lew, will E Warren, and Sherrod Brown follow? One detail Hirsh left out is that Lew "... got a $944,518 check from the failed bank [Citigroup] on January 15, 2009, according to his financial disclosure statement. That was just weeks after Congress passed the Wall Street bailout, funneling $45 billion in taxpayer money to the bank. ...". as reported, from Lew's financial disclosure statements, by Timothy Carney at the Washington Examiner. I am restraining myself from the meaning of Lew's unreadable loopy signature, but I admit I have never seen one THAT unreadable.

- K2K

January 10, 2013 at 7:35pm

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It's not about the credibility of Wall Street, wandrey, it is about having the stones and the credibility to face them down. That will NOT be Jack Lew. He will make them nice and comfy. But, of course, that's what no drama Obama wants.

- roidubouloi

January 10, 2013 at 8:35pm

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"When I Google 'Sheila Bair news', Google still pops up 'Sheila Colleen Bair Jew'." Not to be confused with the "Bear Jew", the character portrayed by Eli Roth in Tarantino's "Inglorious Basterds", who specialized in braining Nazis with a baseball bat specially inscribed by fellow Jews in his old States-side neighborhood.

- wildboy

January 10, 2013 at 11:00pm

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"He will compromise with and cut deals with the Republicans and the Islamists." Who have more things in common than most of us would care to admit.

- wildboy

January 10, 2013 at 11:01pm

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