When Jack Lew became President Obama’s budget director, he removed from his new office a portrait of Alexander Hamilton, the nation’s first Treasury secretary and the father of American finance, and put up paintings of New York City by jobless artists who had been hired into the New Deal’s public works program.
That small gesture, say people who know Lew, speaks volumes about the mind-set of the man Obama has nominated to serve as the 76th Treasury secretary — a sustained focus on protecting the nation’s social safety net over three decades of budget battles in which programs that support the poor and jobless have been targets for cuts.
The experience is unusual for a Treasury secretary, a position traditionally occupied by someone with more of a background in financial markets or corporate America. It has also opened Lew, 57, to criticism from both ends of the political spectrum. Some conservatives say he has a blind obsession with providing government benefits, without care for the nation’s overall finances. Some liberals say he has too often forfeited his principles in search of bipartisan deals.
Yet his history suggests that while Lew aggressively advocates on behalf of programs that protect the poor, he has also been willing to make unpopular compromises out of a belief that the nation must have its financial books in order.
“What makes Jack, ‘Jack,’ and not a caricature of a big government liberal who believes that all spending is good is that he also believes you also need to make sure that every dollar is spent as effectively as possible,” said Kenneth Baer, a former senior adviser to Lew at the Office of Management and Budget. “He has a hard head and a soft heart. He has had to make very hard decisions, especially in the last couple of years when you have limited resources.”
In the budget negotiations of 2011, both sides of Lew’s approach to dealing with the nation’s financial challenges were vividly on display.
Near the end of negotiations over ways to trim the deficit in 2011, Lew was on the phone with a top aide to Senate Minority Leader Mitch McConnell (R-Ky.). The aide introduced the idea of targeting Medicaid, the health insurance program for the poor, for deep spending cuts. The proposal prompted Lew, usually calm and restrained, to become angry.
“No! No! No!” Lew shouted over the telephone, exasperated that a proposal to cut a low-
income program was being introduced at the last minute, according to Republicans and Democrats familiar with the call, which was first reported in Bob Woodward’s book, “The Price of Politics.”
Instead, the mechanism Lew helped design to ensure deficit savings — an automated series of spending cuts known as the sequester that is set to take effect in early March without further action by Congress — spared Medicaid and most other low-income programs. White House officials take pride in that point today — even as other cuts that were agreed upon bring much domestic spending to historic lows.
“Jack’s background seems to have taught him that federal budgets are codifications of our values,” said Ron Pollack, who has worked with Lew as executive director of Families USA, a group that advocates for public health-care coverage. “An apparent high priority value for him, like the president, is the most economically vulnerable families should not be forced to shoulder unbearable burdens.”
But some Republicans see Lew’s commitment to Medicaid and other parts of the social safety net as a weakness. They say Lew has been point man for an administration uninterested in cutting spending deeply enough to slow borrowing.
”They’ve resisted spending reductions at every turn. They had whole programs like Medicaid and food stamps and others that had no spending reductions at all,” said Sen. Jeff Sessions (R-Ala.), a ranking member of the Senate Budget Committee and an opponent of Lew’s nomination.
Although opposed to significant changes in low-income programs, Lew has been willing to put on the table other Democratic sacred cows, including Medicare and Social Security. In the context of a broad deficit-reduction deal, Lew, like Obama, has been in favor of trading a cut in Social Security benefits and a gradual increase in the Medicare eligibility age for substantial tax hikes on the wealthy.
Lew, who has spent decades negotiating bipartisan budget agreements with Republicans, believed in 2011 that the proposals would heighten the chance of a deal that could have positive long-term effects on the economy and only a small impact on seniors, according to people familiar with his thinking.
“Jack Lew is one who agrees we have a long-term fiscal problem we have to address and he is willing to make hard choices on spending,” said Bob Greenstein, president of the left-leaning Center on Budget and Policy Priorities, who disagreed with the idea of raising the Medicare eligibility age.