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Jacob Lew returns to work on fixing nation's finances, again

These leaders have been a driving force behind the nation's economic policies since the financial crisis of 2008.

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As a group, they are viewed by people in both parties as pragmatists with a track record of inspiring trust on both sides of the aisle. Lew, in particular, seems to have few enemies, not much ego and a reputation for focusing on the demands of the deal.

"He's very sharp," said Rep. Dave Camp (R-Mich.), the new chairman of the tax-writing House Ways and Means Committee, who worked with Lew during a successful bipartisan negotiation to cut taxes in December. "You feel like you're reaching him when you talk to him. I think he gets the art of the possible."

Former Clinton budget director Alice Rivlin called Lew a "really good behind-the-scenes negotiator," who played an outsized role in the Clinton administration's dealings in Congress even before he took over as OMB director in 1998. "A lot of the heavy lifting on the Hill fell to Jack."

Though tall and dark like his predecessor, former budget director Peter Orszag, Lew, 55, shares none of Orszag's cowboy-booted, marathon-running swagger. A lawyer by training, Lew exudes a calm geniality. In his book about the 1997 budget deal, Clinton legislative director John Hilley wrote that Lew has "a good personality for negotiating: knowledgeable, fair, and tough when he needed to be."

The son of a Polish Jew who emigrated in 1916, learned English in the New York public schools and made his living as a book dealer and lawyer, Lew graduated magna cum laude from Harvard University, earned a law degree from Georgetown University and went straight to work in government, starting as a legislative aide to the liberal firebrand Bella Abzug of New York.

He rapidly ascended to the speaker's office, becoming Tip O'Neill's domestic policy adviser in 1979. During intense talks with the Reagan White House to avert a looming crisis in the Social Security trust fund, Lew said his job was to carry messages and "send accurate signals about what was acceptable" to each side. When the deal was finally struck, Lew made the call to Pebble Beach to brief O'Neill and Ways and Means Chairman Dan Rostenkowski and to coordinate the announcement with the White House - one of the few times Lew, who observes the Orthodox Jewish sabbath, recalls using the telephone on a Saturday.

Lew said he was proudest of the decision to tax Social Security benefits and plow the revenue back into the trust fund, a key piece of a complex deal that also included a gradual increase in the retirement age. The tax "could easily have been seen by Democrats as an unacceptable benefit cut," Lew said. "But we spent months and months talking about it so it never got into that category of things where, if you accepted it, you would be betraying a principle."

When Clinton took the White House, he chose Lew as the special assistant who helped design the Americorps public service program, now on the chopping block in the House. From there, Lew moved to the budget office, serving under first Rivlin and then Franklin D. Raines before rising to the director's job. During the 1997 budget talks, Lew said his role was to help build the broad frame of an agreement that included tax increases and deep cuts to Medicare spending, then sit down with senior Republican aides to work out the details.

Both deals, Lew said, were propelled by unique circumstances. In 1983, policymakers were facing a deadline when Social Security would have run out of cash to make full payments to retirees. In 1997, Republican Speaker Newt Gingrich was looking for political redemption by cutting a bipartisan budget deal after two politically damaging years during which the Republican-controlled Congress forced government shutdowns over spending.

"In both cases, the parties got to the point where they could work together," he said.

Contrast that with the current climate. Democrats are already drawing the line against Social Security cuts, while House leaders refuse to consider the tax increases that Democrats - and some Republicans - say will be required to save a nation awash in red ink.

Meanwhile, House Republicans say Obama has done little to build trust. In addition to drafting a budget request that wouldn't significantly cut spending until 2013, Obama has so far declined to send Congress a pair of trade agreements with Panama and Colombia, negotiated by President George W. Bush and stalled for years by Democrats.

Lew acknowledges the challenge. Progress "is not impossible," he said. But "this is not a short process."


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