FILE - In this Sept. 12, 2011 file photo, then-Budget Director Jacob Lew, now White House chief of staff, speaks at the White House in Washington. It's the defining ritual of our democracy: the peaceful transfer of power from one citizen to another. And though the outcome of this year's presidential election is still far from certain, the transition is already well under way, with Lew spearheading plans for an Obama second term.

Pablo Martinez Monsivais, Associated Press - Ap

Obama sets adviser to work negotiating over cliff

  • New York Times
  • December 1, 2012 - 11:16 PM


WASHINGTON - When President Obama was locked in painful spending negotiations with House Republicans last spring, his exceedingly meticulous budget director, Jacob Lew, came to the Oval Office to propose some complex changes. As Lew delved deeper into the numbers, Obama put up his hand, signaling him to stop.

"Jack, it's fine," the president said, according to Gene Sperling, Obama's economics adviser. "I trust your values. I trust your judgment on this."

Today Lew is the White House chief of staff and on the short list to become Treasury secretary. Obama has entrusted him with an even bigger task: guiding the White House through negotiations with congressional Republicans to avert automatic tax increases and spending cuts on Jan. 1, which economists warn could throw the country back into recession.

"This is a reset moment for the administration and for Jack," said former Sen. Tom Daschle, a Democrat. "It's a window that will close in a few weeks, but it really is an opportunity to start over. Part of the message of the election was, 'You guys have got to work together.'"

But Lew's last go-round with Republicans, the debt ceiling talks in summer 2011, ended badly. Lew irked House Speaker John Boehner and his staff, who viewed him as an uncompromising know-it-all. Lew's defenders call it an aberration. "I think it's because Jack knows the numbers and they couldn't pull a fast one," said David Plouffe, Obama's chief political adviser.

At 57, Lew may be the most unassuming power broker in Washington. An Orthodox Jew, he leaves work each Friday before sundown, when the Sabbath starts. He brings his lunch (a cheese sandwich and an apple) and eats at his desk.

He may come off as a policy nerd, but he is a fierce negotiator. When defending social safety net programs -- particularly those like Medicaid that help the poor -- Republicans say he morphs into a warrior, though he will make concessions.

Lew arrived in Washington in 1973, a skinny, bookish 18-year-old from New York's Queens borough who got his first taste of Democratic politics at 12, handing out fliers for Eugene McCarthy's presidential campaign. Today, as a two-time former budget director (he also held the job under President Bill Clinton) he has an intricate understanding of budget policy.

In 1983, as an aide to House Speaker Tip O'Neill when Ronald Reagan was president, Lew helped put Social Security on a path to solvency with a plan that, to many Democrats' chagrin, will eventually raise the retirement age to 67.

In 1997, under Clinton, Lew worked with Republicans to balance the federal budget, enabling the president to leave office with a surplus.

He has little use for Washington's social scene. His wife, Ruth, lives in their home in the Bronx; they commute back and forth and have a daughter in Washington and a son in New York.

Lew's worldview was forged in Queens in the late 1960s and early 1970s. As a teenager, he hung around Greenwich Village, where he ran into Don McLean, who had not yet written "American Pie." When the young Lew organized a fundraiser to fight world hunger, he persuaded McLean to play.

If he had a teenage rebellion, it was moving to Minnesota to attend Carleton College (his parents preferred Columbia University), then quitting after a year to work for Bella Abzug, the flamboyant congresswoman. His mother worried that he would never get his degree, but he did, at Harvard. Later, while working on Capitol Hill, he picked up a law degree, attending Georgetown at night.

By the time he was 23, Lew was a top policy aide to O'Neill, an experience that friends say sharpened his sense of how federal spending affects people's lives.

The challenge now for Lew -- and Obama -- is to forge an agreement with Republicans that does not cut too deeply into the entitlement programs Democrats cherish. Like Obama, Lew is a pragmatist.

If Lew gets the Treasury job, the business world will not be unhappy. He is not a creature of Wall Street, but he spent three years in high-level jobs at Citigroup, where he oversaw a unit that lost money, but also profited from betting against the subprime mortgage market.

For Obama, the choice is whether he needs Lew more at Treasury or running the White House. "I have been in countless meetings with the president and Jack," said Valerie Jarrett, Obama's senior adviser, "and also been in meetings ... where Jack hasn't been present, where the president will say, 'What does Jack think?'"

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