Jack Lew, the nominee to become the next Treasury secretary, is a controversial figure partly due to his lucrative stint at a troubled Citibank, and partly because his long career in government reveals a man less focused on fiscal restraint but quite passionate about fighting poverty.
Lew's recent stint at Citibank has the editors at the Wall Street Journal on edge. Lew came to Citibank in 2006 as chief operating officer of its Global Wealth Management division. In 2008, he took the same position at Citi's Alternative Investments unit. During this period, WSJ's editors assert, Lew was likely earning more than $1 million per year, and the results for investors were problematic.
"You see," the WSJ editors argue, "while Mr. Lew's future colleagues at the CAI division were cooking up toxic investments, some of his Global Wealth Management colleagues were feeding them to investors. A lot of those investors later felt they'd been misled about the risks in Citi hedge funds and some Citi employees agreed, sparking an internal debate at Citi, according to reporting in this newspaper."
There is some question what Lew's role was in either Citibank division."The fact that almost no one seems to know what exactly he did for that paycheck," the Journal editors conclude, "underlines the fact that Mr. Lew comes to this job not as an expert or practitioner in financial markets, but as a political actor. Like the current Treasury secretary and fellow Rubin protégé Timothy Geithner, Mr. Lew knows bureaucratic power."
Lew's roots in bureaucratic power go back a generation, and the overarching theme of his career is protecting poverty programs from the budget ax. To some this is a bug. To others, it's a feature.
Lew spent his early career as a congressional staffer and government official, working first in the House of Representatives, including a stint with House Speaker Tip O'Neil. He served as budget director under President Bill Clinton, and was a key player in the 1997 budget compromise with the Republican Congress.
"Tapped as Clinton’s budget director," wrote Zachary Goldfarb in the Washington Post, "Lew faced a budget battle with Republicans, much as he does now. And while the eventual deal was friendly to GOP goals — it included tax cuts and spending cuts — Lew and colleagues stood firm against slashing programs for the poor. In fact, they expanded them."
“During the 1997 budget agreement, Jack was a central player on protecting Medicaid,” John Podesta, Clinton’s chief of staff at the time, told Goldfarb. “He was also able to help expand health insurance for 5 million kids and protect tax benefits that went to the working poor.”
Massimo Calibresi at Time describes Lew as a "passionate progressive on the issue of wealth disparity and programs for the poor."
During the 1980s budget battles, Calibresi noted, Lew was a key figure in saving Medicaid from cuts. "In the 1990s, he again defended Medicaid from the budget ax as President Clinton tacked to the center."
In 2011, Lew was a key figure in the debt limit deal that led to the fiscal cliff fight at the beginning of 2013. In that battle, Lew held the line for poverty programs, insulating them from the sequestration deal that targeted the rest of the budget.
In the "Price of Politics," Bob Woodward describes a speaker phone conversation held in a Republican congressman's office in which Lew, on the other end of line, yelled "No! No! No!" so passionately at one point that the startled GOP staffer hung up the phone.
"This evident passion for what he sees as the moral dimensions in fiscal and economic policy combined with his expertise in the numbers makes him a formidable opponent as Washington heads into more tough negotiations over the budget," Calebresi wrote, noting that Alabama Republican Sen. Jeff Sessions has declared that “Jack Lew must never be secretary of the Treasury.”
Eric Schulzke writes on national politics for the Deseret News. He can be contacted at email@example.com.
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