The “art of the deal,” in Donald Trump’s version, has a hard edge. It involves public bluster, threats of litigation, and confrontational negotiations. It’s about winning, rather than compromise. But there’s another version of deal-making that’s more relevant to how Washington actually works. It’s about passing budgets and avoiding shutdowns. It involves creating space for agreement on taxes and spending. These negotiations usually take place out of public view. And they’re shaped by one of Washington’s most powerful but least understood institutions, the Office of Management and Budget.
This hidden side of government is exemplified by Jacob Lew, the treasury secretary and a two-time former director of the OMB. Quiet and self-effacing, Lew may be the most important official most Americans have never heard of. He illustrates the paradox of how Washington has continued to function over the last several decades even as the nominal institutions of government have become deadlocked and increasingly dysfunctional.
I had an unusual glimpse of Lew’s world last week when I traveled with him to Argentina, Brazil, Colombia and Mexico. During the trip, we had multiple conversations about his 35-year career and the lessons he has drawn from it.
The American public is angry in this election year at a political establishment that makes promises but doesn’t deliver results. To some critics, Lew is an example of an out-of-touch elite that’s disconnected from the middle class. This weekend, he’s helping host the International Monetary Fund and the World Bank, two pillars of the globalized economy.
What’s interesting about Lew is that he’s a doer not a talker, closer to a flight mechanic than a pilot. He’s part of a chain of OMB chiefs who have kept the nation operating through its political machinations since the ’80s. “We come from an old school,” says former OMB Director Leon Panetta. “The first commandment was to get things done, to resolve issues, to find whatever compromises are needed to keep going.”
Lew’s education began with his first boss, House Speaker Tip O’Neill. He was O’Neill’s emissary to the commission headed by Alan Greenspan that fixed a broken Social Security system in 1983 by raising payroll taxes. Today, Lew keeps in his Treasury office the gavel that was used in passing the legislation. It was a gift from O’Neill.
“Lew is a throwback to the Reagan-O’Neill years,” says Ken Duberstein, a prominent Republican who worked in the Reagan White House, eventually as chief of staff. “Principled compromise is what you get with him. He’s into governing, not show and tell.” Lew entered the Clinton White House as a midlevel aide and was dispatched to OMB as an assistant to Panetta, later becoming director in 1998. That’s where he discovered the gearbox of the federal government.
“At OMB, I learned how we could offer things that would make a deal possible,” Lew told me.
House Speaker Newt Gingrich forced government shutdowns in 1995 and 1996 to push for lower federal spending. But those tactics backfired because of public anger, and Lew subsequently negotiated budget deals with Gingrich that advanced key social safety-net programs.
Lew’s story is like one of those movies where you know disaster is coming in the third act, but there’s nothing you can do to stop it. After nearly 20 years of being the trusted intermediary, Lew became a lightning rod for GOP criticism in the bitter budget debates of 2011 that centered on raising the debt ceiling. Then-Speaker John Boehner took such a dislike to Lew’s number-crunching and naysaying that he told President Obama to exclude him from the negotiations.
Nothing is ever really over in Washington, at least in the budget arena. After the debt-ceiling brouhaha, Lew moved to Treasury and began to accomplish, piece by piece, some of the budget reforms that had come apart in 2011 and 2012. Sequestration slowed the pace of spending by about $1 trillion over 10 years; a 2013 tax agreement raised top rates and added over $700 billion in revenue; budget deals from 2013 on cut close to another $200 billion in spending.
“We’ve implemented piecemeal what would have been a major budget deal,” Lew argues. Former House Majority Leader Eric Cantor agrees with him. “Jack’s suggestion that we had the basis for a working compromise is absolutely true,” he told me in an interview. “It lasts to this day.” Lew practices a kind of deal-making that Trump disdains.
But it’s hard to see Trump’s blunderbuss tactics succeeding on such delicate issues as Social Security, Medicaid or international financial crises – where Lew has quietly been doing the nation’s business.
David Ignatius is published twice weekly by THE DAILY STAR.