If confirmed by the Senate, as expected, Jacob “Jack” Lew will begin a second stint as director of the Office of Management and Budget. He served as President Clinton’s OMB director from 1998 to 2001 – the only four years of budget surpluses since the 1960s. President Obama last week nominated Lew to replace Peter Orszag, who recently announced he was leaving the administration.
But Concord Policy Director Joshua Gordon points out in a new blog post that the budget picture has changed considerably since Lew’s first term in the job. The budget environment is more partisan and the country is experiencing the largest deficits since World War II.
When Lew presented the Clinton administration’s final budget in early 2000, the major fiscal policy debate was what to do with the surplus. That budget projected a surplus of $395 billion for 2010. The current projection is a deficit close to $1.4 trillion. We have also racked up $5.6 trillion in deficits since then.
The CBO estimates that nearly 70 percent of the changes since 2000 can be attributed to legislation. So the toughest choices facing Lew are likely to be whether to continue the policies that have had the largest negative impact on the favorable budget outlook he helped create years ago. The 2001 and 2003 tax cuts are scheduled to expire in five months, and the level of discretionary spending is one of the main barriers to agreement on budget plans in Congress.
In addition, the President’s fiscal commission will issue a report Dec. 1. Gordon says that incorporating some of the commission’s proposals into the administration’s next budget and arguing for them on Capitol Hill may be Lew’s most important mission in Round Two at OMB.