Obama Taps Jacob Lew To Replace Peter Orszag As OMB Chief

President Obama named Jacob Lew on Tuesday as his nominee to head the Office of Management and Budget.

Lew, who will replace Peter Orszag, held the same job in the Clinton administration, and Obama praised him for helping to balance the federal budget in the 1990s. He "handed the next administration a record $236 billion budget surplus," the president said, and called on his new appointee to "use his extraordinary skill and experience to cut down that deficit and put our nation back on a fiscally responsible path."

In choosing Lew, an official at the State Department and a favorite of Secretary of State Hillary Rodham Clinton, Obama also accelerated a personnel shuffle. Clinton and other senior State Department officials had resisted the move for weeks. Obama acknowledged this in his remarks, joking that he "had to trade a number of Number One draft picks" to get Clinton to release Lew.

Lew, 54, known as Jack, has a long Washington r©sum©. A lawyer who served as an adviser to House Speaker Tip O'Neill (D-Mass.), he went on to various government posts. He helped launch President Clinton's AmeriCorps public service program before joining the OMB in 1994, and served as the agency's director from 1998 until the end of the Clinton administration. He currently serves as deputy secretary of state for management and resources, a post with a large portfolio and access to Secretary Clinton. Among other things, Lew has helped to manage the State Department's policies in Afghanistan, a big push in aid to Pakistan and the transition to civilian control in Iraq.

Widely admired as a manager and policy wonk, Lew is expected to win easy Senate confirmation. Secretary Clinton, in a letter to State Department employees on Tuesday, described her deputy's appointment as "bittersweet." She wrote, "While I was hoping never to have to replace Jack, the President and our country need his leadership at OMB."

Senators may ask Lew about his pay package from Citigroup, where he served as an executive between his stints in the Clinton and Obama administrations. He received $1.1 million in salary and discretionary cash compensation in 2008 as a managing director of the banking giant -- which took tens of millions of dollars in government bailout money -- and he earned hundreds of thousands of dollars in restricted stock upon his departure, documents show.

In the job of OMB chief, Lew would be responsible for drawing up a budget plan by February to reduce the federal deficit to 3 percent of the size of the economy by 2015. The current deficit is $1.3 trillion -- more than 9 percent of the economy. To meet the goal, he probably would have to entertain the possibilities of tax increases and cuts to popular entitlement programs such as Social Security and Medicare.

His job would be made more difficult by Obama's 2008 promises not to raise taxes on families making less than $250,000 a year. The president has also proposed making permanent a series of tax cuts enacted during the George W. Bush administration, which otherwise would expire at the end of this year, and preventing the alternative minimum tax from hitting millions of additional taxpayers.

The administration has yet to show how it can reach the 3 percent target. Under the budget plan Obama announced in February, the federal deficit would sink to no lower than 3.9 percent of the economy over the next 10 years and begin to rise again by 2020. Indeed, just hours after Obama nominated Lew, the Treasury Department reported that the deficit had topped $1 trillion -- with three months left in the budget year.

The Congressional Budget Office has said that letting the Bush taxes expire, and finding a way to pay for the changes to the alternative minimum tax, would get the administration close to its goal.

A year and a half into Obama's term, the pace of turnover has started to speed up, either through firings or normal attrition. Many more openings are expected by the end of the year, including on the economic team. Some officials said it is possible that Lawrence H. Summers, director of the National Economic Council, and Christina Romer, chairman of the Council of Economic Advisers, could decide to leave before next year. Elsewhere in the administration -- from the NSC to the political staff to the cabinet agencies -- officials expect to see further departures after November's midterm elections.

It is unclear who will replace Lew at the State Department, officials said. His confirmation hearings will probably occur in the fall, with an acting OMB director running the budget process until then.

Staff writers Karen DeYoung and David Cho contributed to this report.

Related Video

Lew Balanced the Bill Before Obama wants a Surplus and to do it again. President Obama OMB Executive Announcement New Executive of Bill Lew Economy Politics President Obama introduces Jacob Lew as his hopeful to turn executive of the Office of Management and Budget. The President praises Lew for his purpose in balancing the bill when he led OMB from 1998 to 2001.

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