January 9, 2012
President Obama announced today he has chosen budget director Jacob (Jack) Lew to replace William Daley as White House chief of staff in the latest shakeup in an administration gearing up for a tough reelection campaign.
Daley stepped down after only a year in the post, and plans to return to his hometown of Chicago. Obama made the announcement at the White House this afternoon as he stood flanked by both men.
“There is no question I’m going to deeply miss having Bill at my side at the White House, but as he will soon find out, Chicago is only a phone call away and I will be using that phone number quite a bit,” Obama told reporters. “I plan to continue to seek Bill’s advice and counsel on a whole range of issues in the months and years to come, and here in Washington I have every confidence that Jack will make sure that we don’t miss a beat.”
It was no secret that Daley, 63, was on his way out, after he was told last November to hand over most of his day-to-day West Wing responsibilities to senior Obama adviser Pete Rouse and assume what White House officials described as a more strategic operational responsibilities. Daley, a longtime banker who served as secretary of Commerce in the Clinton administration, was expected to help the White House’s relations with Wall Street as it implemented financial reforms in the wake of the recession. But Daley never appeared comfortable in the job
Daley, who succeeded Rahm Emanuel, raised the ire of Democrats after he accused both congressional Democrats and Republicans of impeding Obama’s ability to lead in an October interview with POLITICO. He was also the subject of widespread criticism from political operatives from both parties, who felt Daley had failed to strengthen relations between the White House and Congress during his first 10 months on the job.
This past weekend, The New York Times published a profile of Michelle Obama, in which the first lady was portrayed as being in conflict with many members of the White House staff over the past two years, including Emanuel and former press secretary Robert Gibbs.
Lew, highly respected in Washington, was instrumental in negotiating the debt-ceiling talks with Republicans in the summer of 2011. He served as director of the Office and Management once before, during the Clinton administration, and spent the first two years of Obama’s administration as a high ranking budget and operations official in the Department of State.
“During his first tour at OMB under President Clinton, Jack was the only budget director in history to preside over budget surpluses for three consecutive years,” Obama said. “And over the last year he has helped strengthen our economy and streamlined the government at a time when we need to do everything we can to keep our recovery going.”
Rough Confirmation Process Earlier
Lew was confirmed in November of 2010 as head the Office of Management and Budget after Sen. Mary Landrieu, D-La., dropped her months-long hold against the nomination and the Senate confirmed Lew by voice vote. The administration had 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 roadblock 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 had been in limbo since September 2010 while the administration tried to iron out the dispute with Landrieu. In November that year, Obama welcomed the news of Lew’s confirmation and praised his “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 when Lew was confirmed. “I am confident Jack Lew can lead us in these efforts, and look forward to working with him in the days ahead.”
The delay in Senate action on Lew’s nomination came at a time when the nation continued to stagger through a devastating economic downturn. The President and Congress faced 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. At that time, the administration was also in the midst of putting together a budget for 2012 that needed 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.
Lew’s Background and Biography
At the OBM, Lew’s low-key style provided 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 two years before being confirmed as head of the OMB, Lew served as 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 was modeled on a similar review at the Pentagon. Prior to that, he was chief of operations at New York University and then chief operating officer at Citi Alternative.
Back in 2010 when Sen. Landrieu held up the Lew nomination to OMB, James Horney, director of federal policy at the Center on Budget and Policy Priorities, complained that Lew’s nomination had fallen victim to “a dysfunctional confirmation process in the United States Senate” with serious ramifications for the government and the economy. Until he was confirmed, Horney said, Lew had “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 said at the time. “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.”
Michelle Hirsch of The Fiscal Times contributed reporting to this article. Portions of this piece were published earlier in The Fiscal Times.