Jacob Lew knows surpluses. Can he help produce one?
If only it took just this to get us back to fiscal sustainability: put back in place the budget director who last saw the federal government running budget surpluses鈥�Jack Lew, President Clinton鈥檚 last OMB director. Well, it can鈥檛 work as magically as that, unfortunately, despite the that may suggest so. But Jack Lew does know more than the mere experience of budget surpluses; he understands the policies that produced those surpluses. And I presume he remembers that although there was certainly a little bit of luck involved in the 鈥渋rrational exuberance鈥� of the stock market in the late 1990s which provided such convenient, repeated 鈥渞evenue surprises鈥� (via capital gains and dividend tax revenues), there was a bit of hard and good policy work in the Clinton mix, too, with effective budget rules that controlled spending (statutory PAYGO without costly exemptions, caps on discretionary spending), and even tax increases that raised revenue (yes, raised revenue!) and national saving and, hence, economic growth.
So now Jack Lew will get a chance to advise President Obama on what he should do about the Bush tax cuts which he presumably did not approve of at the end of the Clinton Administration, at a time when we were projected to run $5.6 trillion in surpluses over the next ten years (FY2002-11). If , how will they be seen in this new context of over the now next ten years (FY2011-20)? Will turning them into the Obama tax cuts under the direction of a Clinton-surpluses budget director somehow make them better? The coming debate over what to do with these tax cuts is sure to be very interesting鈥揵ut also quite agonizing for anyone with Jack Lew鈥檚 combination of historical budget experience and current budget role.
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