Lew Confirmed as OMB Chief after Landrieu Gets Her Way
Policy + Politics

Lew Confirmed as OMB Chief after Landrieu Gets Her Way

Caitlin Curran/The Fiscal Times

Jacob ("Jack") Lew, President Obama's choice to head the Office of Management and Budget, is free at last, after Sen. Mary Landrieu, D-La., dropped her months-long hold against his nomination late Thursday night and the Senate confirmed Lew by voice vote. Lew was sworn in this afternoon by the White House executive clerk, Tim Saunders.

The administration repeatedly pleaded for a speedy confirmation of Lew to replace former White House budget chief Peter Orszag amid serious budget and economic problems. But Landrieu kept the road block in place until she could extract concessions from the Obama administration on deep-water and shallow-water drilling in the Gulf of Mexico in the wake of the BP oil spill and a brief moratorium on drilling.

Lew, a former OMB director during the Clinton administration who served the past two years as a high-ranking official in the State Department, has been in limbo since September while the administration tried to iron out the dispute with Landrieu. Obama welcomed the news of Lew's confirmation Thursday night and praised Lew's "unparalleled experience and wisdom" to right the economy.

"After years of irresponsibility in Washington, we need to make the tough choices to put our country back on a sustainable fiscal path and lay the foundation for long-term job creation and economic growth," Obama said in a statement. "I am confident Jack Lew can lead us in these efforts, and look forward to working with him in the days ahead."

Landrieu cited "notable progress" in her talks with the Interior Department and said that some shallow water permits had been issued in recent weeks. She said she had a commitment from Interior Secretary Ken Salazar to travel to Louisiana next week and provide some clarity to the rules."I figured it would get their attention," Landrieu said of the hold, "and I think it has."

The administration is putting together a budget for 2012 that needs boost the fragile economic recovery, and begin the process of putting the budget on a sustainable path.

The delay in Senate action on Lew's nomination couldn't have come at a worse time, as the nation continues to stagger through a devastating economic downturn. The President and Congress face decisions about appropriations for fiscal year 2011, expiring tax cuts, the expiration of extended unemployment benefits, and a pending 21 percent cut in Medicare physician reimbursements.

In early December, the President's Commission on Fiscal Responsibility and Reform will try to reach agreement on a plan to reduce the deficit. Not too far into next year, the debt limit will have to be increased. And the administration is in the middle of putting together a budget for 2012 that needs to provide a boost for the fragile economic recovery, meet crucial national needs, and begin the process of putting the budget on a sustainable path.

She's Got a Hold on Lew
The saga began nearly four months ago, after Orszag resigned as OMB Director and decamped for New York to be with his fiancé. Obama wasted little time in finding a successor to Orszag, and last July tapped Lew. The 55-year-old Lew, a lawyer and one-time adviser to legendary House Speaker Tip O'Neill, D-Mass., has impeccable credentials as an expert on budget policy and the inner working of the federal bureaucracy.

But the wheels started to come off the bus in September when Landrieu, put a "hold" on Lew's nomination before it could reach the Senate floor.

As Obama and many others were quick to note, Lew was at the federal budget helm in the Clinton administration during the 1990s, the last time the budget was balanced. It was little surprise, then, that he sailed through his confirmation hearings last summer and received the overwhelming endorsement of the Senate Budget Committee and the Senate Homeland Security and Governmental Affairs Committee.

But the wheels started to come off the bus in September when Landrieu, put a "hold" on Lew's nomination before it could reach the Senate floor.

A hold is an informal practice by which any senator can inform his floor leader that he does not wish a particular bill or other measure to reach the floor for consideration — and usually that is enough to stop a measure or nomination in its tracks.

Landrieu wasn't concerned about the quality of the nominee; in fact she agreed Lew was a good choice. Rather, she was protesting the president's decision to impose a six-month moratorium on deep sea oil and gas drilling in the Gulf of Mexico, following the catastrophic BP oil spill.

Landrieu and others in Louisiana complained that the moratorium threatened the oil and gas industry and could inflict further harm on the Gulf Coast economy. Yet even after Salazar lifted the moratorium on Oct. 12 Landrieu found other excuses to keep Lew's nomination in limbo. Earlier this week, she complained about new drilling rules put in place that were meant to prevent another disaster like the April 20 BP oil spill that pumped more than 200 million gallons of crude oil into the gulf. The new rules focused on making oil rig blow-out preventers work properly, but Landrieu — a booster of the oil industry — insists the new rules are a "regulatory nightmare" that are frustrating a resumption of drilling; she said she would continue to block Lew's nomination until the Interior Department fixes them.

"I'm not asking to be easy on the oil and gas companies, I'm not asking to give blanket permits, I'm asking for clarity of the new regulatory regime," Landrieu said during a teleconference with reporters.

Some budget experts said Landrieu went too far in advancing her state's parochial interests by preventing a president from her own party from putting in place a new budget director.

Landrieu and Republican Sen. David Vitter of Louisiana weren't the first to use whatever leverage they could to win concessions or attention for their state. That game is played all the time on Capitol Hill. But some budget experts and good government advocates said Landrieu went too far in advancing her state's parochial interests by preventing a president from her own party from putting in place a new budget director during these critical economic times.

"I think this is a really good example of why we don't negotiate with hostage takers," Craig Jennings, director of federal fiscal policy at the nonpartisan OMB Watch, told The Fiscal Times shortly before Landrieu withdrew her hold. "Her first demand was met and then she didn't release the hold, and now there's a second demand which is still a little amorphous, I think. Let's say that demand is met. What is she going to do next?"

"It's kind of hard for the administration to roll over," he added, "because that really opens itself for more of this kind of shenanigans."

Yet it appears Landrieu played her political cards well. She said in a statement late Thursday that: "Tonight I received a commitment from Interior Secretary Ken Salazar to provide certainty and regulatory clarity to an industry that has operated in the dark for months with shifting rule."

"The Secretary will come to Louisiana on Monday to meet with industry and express the administration's support for the oil and gas industry," she added. "He will outline the path forward so that permits will be issued and the people of Louisiana can get back to work in this vital industry. Given this commitment, I released my hold, so that Jack Lew can get to work balancing the federal budget and putting this country back on a path of fiscal discipline." Landrieu said Salazar is expected to issue several drilling permits in the coming weeks and he is making a trip to the Gulf on Monday to reiterate is commitment to the future of the Gulf.

James Horney, director of federal policy at the Center on Budget and Policy Priorities, complained this week that Lew's nomination has fallen victim to "a dysfunctional confirmation process in the United States Senate" with serious ramifications for the government and the economy. Until Thursday night, Horney said, Lew has "not yet been able to put his enormous talents to work to help solve the serious budget problems we face."

"Jack Lew is not superman," Horney added. "The budget problems we face will not go away just because he is confirmed. But having him at the helm at OMB will make it a lot more likely that real progress can be made on these issues."

Jeffrey Zients has served as acting director and Rob Nabors as acting deputy director during the impasse, and both men are experienced and highly regarded at OMB. "But it would be good if agencies knew what they could expect in the future, and they're only going to get that from a permanent director," Jennings of OMB Watch noted.

Lew's low-key style will provide a contrast to the high-profile Orszag, whose personal relationships often made their way into Washington gossip columns. Although he operated largely behind the scenes in the Clinton administration as a special assistant to the president and then deputy director of OMB before being tapped as budget director, Lew was credited with helping launch Clinton's national service program and providing critical technical and political advice during the talks that led to the historic balanced budget deal with the Republican congressional leadership in the spring of 1997. In the final frenetic negotiations before the White House and Republican leaders announced their agreement May 2, Lew was the one who scoured the language for political minefields and unwelcome last-minute changes by the Republicans.

Between 1998 and 2001, Lew led the Clinton administration's budget team and served as a member of the National Security Council. During his tenure at OMB, the federal budget operated at a surplus for three consecutive years. As special assistant to President Clinton from 1993 to 1994, Lew helped design AmeriCorps, the national service program. Lew was described by colleagues and associates at the time as a smart, somewhat nerdy technocrat and legislative craftsman with a passion for the federal food stamp program and other social welfare policies that can better the lives of the poor. He is widely respected by centrists and liberals alike.

For the past two years, Lew has been a senior adviser to Hillary Clinton at the State Department, where he was deputy secretary for management and resources. He was well received when he was selected for that post, where he took charge of overhauling the Foreign Service and foreign aid bureaucracies. He initiated a Quadrennial Diplomacy and Development Review to set a plan for the department. It is modeled on a similar review at the Pentagon and its results are expected this fall. Prior to that, he was chief of operations at New York University and then chief operating officer at Citi Alternative.