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S. Hrg. 111–1090 

NOMINATION OF HON. JACOB J. LEW 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

NOMINATION OF HON. JACOB J. LEW TO BE DIRECTOR, OFFICE OF 

MANAGEMENT AND BUDGET 

SEPTEMBER 16, 2010 

Available via the World Wide Web: http://www.fdsys.gov 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

ROLAND W. BURRIS, Illinois 

EDWARD E. KAUFMAN, Delaware 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

GEORGE V. VOINOVICH, Ohio 

JOHN ENSIGN, Nevada 

LINDSEY GRAHAM, South Carolina 

MICHAEL L. ALEXANDER, Staff Director 

LAWRENCE B. NOVEY, Senior Counsel 

KRISTINE V. LAM, Professional Staff Member 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

JENNIFER L. TARR, Minority Counsel 

MARK B. LEDUC, Minority Legislative Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

PATRICIA R. HOGAN, Publications Clerk and GPO Detailee 

LAURA W. KILBRIDE, Hearing Clerk 

(III) 

C O N T E N T S 

Opening statements: Page 

Senator Lieberman ........................................................................................... 1 

Senator Collins ................................................................................................. 2 

Senator Akaka .................................................................................................. 12 

Senator Carper ................................................................................................. 15 

Senator Tester .................................................................................................. 18 

Senator Brown .................................................................................................. 20 

Prepared statements: 

Senator Lieberman ........................................................................................... 31 

Senator Collins ................................................................................................. 33 

Senator Akaka .................................................................................................. 35 

WITNESSES 

THURSDAY, SEPTEMBER 16, 2010 

Hon. Charles E. Schumer, a U.S. Senator from the State of New York ............. 4 

Hon. Jacob J. Lew to be Director, Office of Management and Budget ................ 6 

ALPHABETICAL LIST OF WITNESSES

Lew, Hon. Jacob J.: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 39 

Biographical and financial information .......................................................... 42 

Letter from the Office of Government Ethics ................................................. 53 

Responses to pre-hearing questions ................................................................ 54 

Responses to post-hearing questions for the Record ..................................... 131 

Schumer, Hon. Charles E.: 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 37 

APPENDIX

Charts submitted for the Record by Senator Ensign ............................................ 153 

(1) 

NOMINATION OF HON. JACOB J. LEW 

THURSDAY, SEPTEMBER 16, 2010 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY AND

GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 3:05 p.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Joseph I. Lieberman, presiding. 

Present: Senators Lieberman, Levin, Akaka, Carper, Tester, Collins, and Brown. 

OPENING STATEMENT OF CHAIRMAN LIEBERMAN 

Chairman LIEBERMAN. The hearing will come to order. Good 

afternoon and welcome. I note the virtual presence of Senator 

Schumer, but not the actual presence. Pardon? He is in the hall? 

Tell him—wait, the door is opening. Yes, ladies and gentlemen, 

from the State of New York—— 

Senator SCHUMER. At your service. 

Senator COLLINS. Always making an entrance. 

Chairman LIEBERMAN. A grand entrance. [Laughter.] 

Now, Senator Schumer, it is possible that you are very anxious 

to hear the opening statements—— 

Senator SCHUMER. I am. 

Chairman LIEBERMAN [continuing]. By Senator Collins and me, 

but if you are busy—— 

Senator SCHUMER. No—— 

Chairman LIEBERMAN [continuing]. And because you are an extremely powerful Senator, we would welcome your opening statement first. 

Senator SCHUMER. I would be happy to sit and hear yours, Mr. 

Chairman and Madam Ranking Member. 

Chairman LIEBERMAN. Really? That is very courteous. [Laughter.] 

Senator Collins does not think you will enjoy hearing her opening statement. [Laughter.] 

Senator SCHUMER. Does she not like you? 

Mr. LEW. I hope it is not about me. 

Chairman LIEBERMAN. Mine will be brief. 

It is a pleasure to welcome Jack Lew for this hearing on the 

President’s nomination for him to be the next Director of the Office 

of Management and Budget (OMB). We all know that everything 

in life is relative, and probably at different times in your work as 

Deputy Secretary of State, particularly dealing with Iraq and AfVerDate Nov 24 2008 14:55 Oct 26, 2011 Jkt 63830 PO 00000 Frm 000005 Fmt 06633 Sfmt 06633 P:\DOCS\63830.TXT SAFFAIRS PsN: PAT
2 

ghanistan, you could not imagine you could have a more challenging job, but now you will, if confirmed. 

Your long career managing budgets, finances, technology, and operations in the government, private, and academic sectors, including having been the Director of OMB for President Clinton, makes 

your ability to do this job self-evident, in my opinion. 

The career achievement that you have which gives me most hope 

is that as budget director under President Clinton, you left office 

with a $237 billion Federal budget surplus. We all know that times 

have changed and that our present economic challenges are different and more difficult than they were in the 1990s, and yet the 

experience that you had then, not just within the Administration 

but in negotiating with Congress to come up with the Balanced 

Budget Act, I think will serve you and the Administration and the 

American people very well in the months ahead. 

Obviously, we are facing two big problems now. One is to grow 

the economy and create more jobs, and that is the immediate problem. The other, longer term, is to get our budget back in balance. 

The President has appointed the National Commission on Fiscal 

Responsibility and Reform, which will be working on a proposal, 

led by our former colleague Alan Simpson and Erskine Bowles, 

former Chief of Staff. It is urgent, I think, that Congress act on 

these recommendations. If you are confirmed, as I believe you will 

be, I hope you will be able to work with the Commission, if that 

is appropriate, but certainly to work with us as we respond to the 

Commission’s recommendations. 

As I believe you may have been made aware during the staff 

interview, Vice President Joe Biden sent a letter earlier this year 

to Senator Kent Conrad, who was the leader of a group of us negotiating around the time of the debt extension, stating the Administration’s support for bringing the recommendations of the Commission up for a vote in this Congress. That is perhaps a tall order, 

but it was a commitment made, and I would like to hear from you 

about whether you support that commitment. 

I am going to put the rest of my statement in the record. I have 

some other matters more particularly related to governmental 

management that I would like to talk to you about in the question 

and answer period. But for now, I thank you for agreeing to take 

on the enormous challenge of being the Director of OMB at this 

time, and I look forward to working with you, if you are confirmed. 

Chairman LIEBERMAN. Senator Collins. 

OPENING STATEMENT OF SENATOR COLLINS 

Senator COLLINS. Thank you, Mr. Chairman. Mr. Chairman, I 

am going to give our colleague from New York one more opportunity to do his introductory statement before I give my opening 

statement, if he would like to do so. 

Senator SCHUMER. I am a little worried what you are going to 

say, so I want to stay here. [Laughter.] 

Senator COLLINS. Then I shall proceed, Mr. Chairman. 

More than eight million Americans have lost their jobs since the 

‘‘Great Recession’’ began in 2008. Unemployment remains unacceptably high, increasing to 9.6 percent just last month. What little 

job growth that we have seen has been disappointingly weak. 

3 

The fiscal policies that the Administration and Congress undertake must acknowledge this reality, get the economy moving again, 

and put Americans back to work. Key to accomplishing these goals 

is an extension of the tax relief that is scheduled to expire at the 

end of this year. If we do not act, Americans will face one of the 

largest tax increases in U.S. history. This is no time to raise taxes. 

Indeed, it would be the worst time to increase the tax burden on 

America’s families and small businesses. 

As Peter Orszag, President Obama’s former OMB Director, recently pointed out, the failure to extend existing tax relief would 

‘‘make an already stagnating job market worse.’’ I hope that the 

President will heed the advice of his former budget director and 

abandon his plan to raise taxes at this critical time. 

This Administration’s policies have failed to stimulate private 

sector investment, which is key to creating permanent jobs. In fact, 

many of the fiscal, economic, and budget policies pursued by this 

Administration have made matters worse. The budget put forth by 

the President, which I opposed, would double the public debt in 5 

years and triple it in 10 years. The President’s new health care law 

is already causing health insurance premiums to increase for many 

employers and employees, and the uncertainty over tax policies is 

hindering job creation. 

Actually, one small businessman in Maine told me over the recess that it was not the uncertainty, it was the certainty of higher 

costs, of more taxes, of higher health insurance premiums, and of 

more regulation that was causing him to delay purchasing a new 

business and creating new jobs. 

Everywhere I traveled in Maine last month, whether I was talking to a machine shop owner, a trucking company operator, a small 

residential contractor, or other employers, I heard the same refrain. Given the tax and economic policies coming out of Washington, we do not dare create any jobs, take any risks, or make any 

investments. 

Our Nation’s future prosperity is shackled to an out-of-control 

Federal debt. This year’s deficit of $1.3 trillion, 9.1 percent of Gross 

Domestic Product (GDP), is the second largest shortfall in 65 years. 

Only last year’s deficit, which amounted to 9.9 percent of GDP, was 

larger. By the end of the upcoming fiscal year, the Congressional 

Budget Office estimates that publicly held debt will exceed $10 trillion, 66 percent of GDP, and will rise to nearly 90 percent of GDP 

by the end of this decade if current policies are continued. 

The cost of entitlement programs continues to escalate and is 

worsened by the President’s health care law, which creates unsustainable new entitlement programs while failing to address spiraling health care costs. Like a perfect storm, rising entitlement 

costs will soon collide head on with the cresting waves of aging 

Baby Boomers set to leave their jobs. The result will put even more 

pressure on already strained Social Security and Medicare budgets. 

In other words, I fear that we could be seeing merely a preview 

of what is to come. Without bold, urgent action, we are heading toward a future of financial stagnation, bogged down by costly entitlements, slow job creation, and sluggish economic growth. 

This is the stark economic and fiscal environment that will confront the next OMB Director. OMB will continue to be the lead 

4 

1The prepared statement of Senator Schumer appears in the Appendix on page 37. 

player as the Administration formulates policies, I hope in cooperation with Congress, to deal with these grim economic realities and 

unsustainable budgets. 

From the OMB Director, we need common-sense analyses of 

what is working and what is not. We require honest assessments 

of fiscal realities, untarnished by political calculus. And we expect 

the courage to admit mistakes and change course. Otherwise, the 

Executive Branch and Congress cannot make the bold moves, the 

difficult decisions needed to do what is right for the American taxpayer. 

If confirmed, Mr. Lew will need to develop a realistic plan that 

prevents the Federal budget from becoming a mammoth anchor, 

dragging down growth in jobs and personal income. The last time 

Mr. Lew served as OMB Director, a Democratic President worked 

with a Republican Congress to balance the Federal budget. I hope 

that this is a case where history repeats itself. [Laughter.] 

Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thank you, Senator Collins. I was about 

to say, Senator Schumer, that was not so bad, until the end. 

[Laughter.] 

Senator SCHUMER. I was going to comment, Mr. Chairman, this 

is an amazingly bipartisan Committee—— 

Chairman LIEBERMAN. It is. 

Senator SCHUMER [continuing]. An Independent and Republicans 

surrounded by Democrats on either side—— 

Chairman LIEBERMAN. Yes. 

Senator SCHUMER [continuing]. But that comment might have 

been made better a few minutes earlier. [Laughter.] 

Chairman LIEBERMAN. Anyway, we welcome you. We thank you 

for being here and for your patience in sitting through the opening 

statements. Please proceed. 

HON. CHARLES E. SCHUMER,1 A U.S. SENATOR FROM THE 

STATE OF NEW YORK 

Senator SCHUMER. Thank you, Mr. Chairman and Ranking Member, and it is great to be here to introduce both my friend and fellow New Yorker, Jack Lew. 

No matter how many years Mr. Lew spends here in Washington, 

he is a New Yorker. He grew up in Forest Hills, went to Forest 

Hills High School. His lovely wife, Ruth, grew up not far from 

where I grew up on Ocean Parkway in Brooklyn and went to 

Hunter High School. I went to Madison High School, and we used 

to play Forest Hills in basketball, but we always lost. Our team’s 

motto, Mr. Chairman, was, we may be small, but we are slow. 

[Laughter.] 

Anyway, I am delighted to endorse Mr. Lew’s nomination to 

serve as the next Director of the Office of Management and Budget. 

Mr. Lew, as everybody knows, is an accomplished public servant. 

He is renowned for his managerial prowess, his common-sense approach to solving tough problems. He is uniquely well qualified to 

take the helm of OMB in these precarious times. He is no stranger 

to many of us in this room. 

5 

Mr. Lew and I met three decades ago when I was a wide-eyed 

freshman Congressman and he was a top aide to House Speaker 

Tip O’Neill. I know that the Speaker had a tremendous influence 

on Mr. Lew, and it is clear that Mr. Lew shares the late Speaker’s 

indefatigable work ethic and sense of civic duty. 

And, of course, Mr. Lew is no stranger to the OMB, either. He 

joined the Clinton OMB in 1994 and quickly distinguished himself 

not only as a knowledgeable policy wonk, adept at navigating the 

intricacies of the tax code and Federal budget, but also as an agile 

leader with a knack for operations. For that reason, he rose to become OMB’s Chief Operating Officer, and then in 1998, he was 

named Director. As we all know, when he left the OMB at the end 

of the Clinton Administration, the Federal Government had an unprecedented surplus of $236 billion, and we will not comment about 

what happened in the following 8 years. 

Anyway, Mr. Lew spent the past decade further honing his managerial skills in a number of high-stakes environments, from the 

private sector to academia, but public service always beckons for 

someone of such high quality, and once again he answered the call 

to public duty and returned to Washington, DC, to become the Deputy Secretary for Management and Resources at the State Department, a new position. According to his colleagues at State, he 

‘‘transformed’’ the Department, cutting red tape and increasing cooperation throughout Foggy Bottom. I know that Secretary of State 

Hillary Clinton is sad to lose him, but I am confident he will prove 

to be a valuable asset to the President and to the American people 

in his new position. 

I look forward to working with him and the rest of the President’s economic team as we focus on a growth agenda in the 

months and years to come. Job creation is my top priority in Congress, and I know he shares that commitment to jump-starting the 

American economy. 

In conclusion, Mr. Chairman, I am confident that he possesses 

the expertise and work ethic necessary to once again excel as the 

Director of OMB. Thank you for the opportunity to speak, and I 

hope the Committee will approve this nomination unanimously 

with the certitude that Deputy Secretary Lew’s impressive credentials merit. 

Mr. Lew, to you, Ruth, and Shoshana, congratulations. 

Chairman LIEBERMAN. Thanks, Senator Schumer. That was a 

wonderful statement. We appreciate the time that you took to be 

here, and I know it is a reflection of your confidence in the nominee. Thank you very much. 

Senator SCHUMER. Thank you, Mr. Chairman, and I thank the 

entire Committee. 

Chairman LIEBERMAN. Thank you. 

Mr. Lew has filed responses to a biographical and financial questionnaire, answered pre-hearing questions submitted by the Committee, and had his financial statements reviewed by the Office of 

Government Ethics. Without objection, this information will be 

made part of the hearing record, with the exception of the financial 

data, which are on file and available for public inspection at the 

Committee offices. 

6 

1The prepared statement of Mr. Lew appears in the Appendix on page 39. 

Mr. Lew, as you know probably, our Committee rules require 

that all witnesses at nomination hearings give their testimony 

under oath, so I would ask you to please stand and raise your right 

hand. 

Do you swear that the testimony you are about to give to the 

Committee will be the truth, the whole truth, and nothing but the 

truth, so help you, God? 

Mr. LEW. Yes. 

Chairman LIEBERMAN. Thank you. Please be seated. We would 

welcome an opening statement and particularly would look forward 

to the introduction of your family members who are here. 

TESTIMONY OF HON. JACOB J. LEW 1 TO BE DIRECTOR, 

OFFICE OF MANAGEMENT AND BUDGET 

Mr. LEW. Thank you very much, Mr. Chairman, and thank you, 

Ranking Member Collins and the Members of the Committee, for 

welcoming me here today. I take great pride in my current and 

prior government service, and it is a true honor to be considered 

today as the nominee to be Director of the Office of Management 

and Budget. 

I thank Senator Schumer for his very kind introduction. I am 

proud to come before the Committee as a New Yorker. 

While I have spent many years in Washington, DC, New York 

will always be home. 

I am delighted that joining me today are my wife, Ruth, and my 

daughter, Shoshana. Together with my son, Danny, and my daughter-in-law, Zahava, who could not be here today—they are in New 

York—my family has supported me unfailingly and unconditionally 

during my career in public service. There have often been long 

hours, long days, long nights, and unfortunately, many missed family events. Their daily sacrifices make possible my public service, 

and for that, I am eternally grateful. 

I am also blessed to have had role models whose influence is always with me. My parents, Ruth and Irving Lew, taught me the 

importance of being involved in the community and the world 

around us. And the late Speaker Thomas P. O’Neill, Jr., was not 

just my boss for 8 years early in my career, but he was a mentor 

who shared his wisdom about the legislative process, the policy 

making process, and more generally about how to forge consensus. 

It has been my honor and privilege to serve under President 

Clinton and most recently as Deputy to Secretary of State Clinton, 

and I am deeply grateful to both of them for the opportunity to 

serve and for their continuing friendship. 

Finally, I am grateful to President Obama for nominating me to 

serve as the next Director of the Office of Management and Budget. 

I am humbled by the confidence he has shown in me as we face 

the enormous challenges that lie ahead. 

This is neither my first time testifying before this Committee nor 

my first time testifying before this Committee as the nominee to 

be Director of the Office of Management and Budget. My familiarity with OMB gives me a knowledge of the institution’s workings 

and a respect that is deep and heartfelt. I appreciate the centrality 

7 

of OMB to the efficient and effective operation of the Federal Government, and I have the greatest respect and admiration for the 

women and men who fulfill that critical mission. OMB is about 

helping to make policy and also ensuring that it can be implemented effectively. 

The American people rightfully expect their government to spend 

their tax dollars wisely and to avoid waste. They also have a right 

to expect their government to deliver services with the ease and 

convenience that can be found in so many other parts of daily life. 

If confirmed as OMB Director, making government more efficient 

and more effective, more open and responsive to the American people will be a key priority of mine, as it is of the President. 

Since my previous service at OMB, I have worked in similar 

management and budget roles in large nonprofit and private sector 

organizations and have experienced firsthand that all large organizations wrestle with the same challenge of how to fulfill strategic 

core missions with scarce resources and competing demands. Indeed, the process of forging consensus behind priorities, directing 

new resources where they are most critical, and finding internal 

savings to support new initiatives is a universal challenge. 

In addition, in my current role at the State Department, I have 

now been on the front lines not just setting policy, but working to 

implement it, often at the very finest levels of detail and with the 

greatest of stakes, the safety of our brave men and women who volunteer to serve in dangerous assignments. And I have gained visibility into the array of homeland security issues that this Committee spends so much time concentrating on. 

Together, these experiences from the past decade have broadened 

the perspective that I would bring to the position for which you are 

considering me again. As we know all too well, President Obama 

has asked me to serve in this position at a time that is very different from when I last sat in the Director’s office. In the late 

1990s, our challenge was how to maintain a prudent fiscal policy 

while making the transition into a world of budget surplus at a 

time of robust economic growth. Today, a series of policy choices 

and the worst economic downturn since the Great Depression 

present us with a very different set of challenges, specifically, how 

to sustain and deepen the economic recovery and spur new job creation in the face of unsustainable budget deficits. 

Indeed, the coming months may be the most critical time in fiscal 

policy in recent memory. As the President has said, it will take 

tough choices and putting partisan differences aside in order to do 

what is right for the country today and for our children and our 

grandchildren in the years ahead. 

Throughout my career, I have worked collaboratively across partisan and ideological divides, trying to cut through gridlock and 

solve seemingly intractable problems. If confirmed as OMB Director, I will work in that bipartisan fashion again with the Members 

of this Committee, the leadership of both chambers, and with all 

of those committed to taking constructive steps to rejuvenating our 

Nation’s economy and its fiscal standing. 

And while we should aspire to never waste taxpayer dollars, regardless of whether the budget is in surplus or deficit, the management of the Federal Government is particularly important during 

8 

lean times. If confirmed, I look forward to working with the Committee to make sure that every dollar we spend has a desired impact and makes a difference. 

Getting our economy back on track and our fiscal house in order 

will take hard work. I am honored that the President has asked me 

to join him in this endeavor, and I am grateful to this Committee 

for its consideration of my nomination. Thank you, and I would be 

happy to answer any questions that the Committee has. 

Chairman LIEBERMAN. Thank you very much for that opening 

statement. 

Let me start with the three standard questions we ask of all of 

the nominees that come before the Committee. First, is there anything you are aware of in your background that might present a 

conflict of interest with the duties of the office to which you have 

been nominated? 

Mr. LEW. No. 

Chairman LIEBERMAN. Second, do you know of anything personal 

or otherwise that would in any way prevent you from fully and 

honorably discharging the responsibilities of the office to which you 

have been nominated? 

Mr. LEW. No. 

Chairman LIEBERMAN. And third, do you agree without reservation to respond to any reasonable summons to appear and testify 

before any duly constituted committee of Congress if you are confirmed? 

Mr. LEW. Yes, I do. 

Chairman LIEBERMAN. Thank you. We will start with a first 

round of questions limited to 7 minutes each. 

Let me just pick up from something you said at the end of your 

opening statement about your record of working across party lines 

to try to solve problems. You played an important role for the late 

great Speaker O’Neill, and, of course, perhaps the most popular 

story told about Tip O’Neill these days, and there are a lot of great 

ones, is about his cooperation across party lines with President 

Reagan to solve some big fiscal problems, including obviously the 

Social Security crisis at that time. 

I think you come into this position, if confirmed, with great credibility in that regard, and I hope and I trust that the Administration knows that as we go into the difficult months ahead in the negotiations to try to begin to first improve the economy and then to 

deal with the enormous burden of national debt, that credibility of 

yours is a tremendous asset. I hope that you will not allow it to 

be squandered or in any way compromised because it is going to 

be critically necessary for somebody to be a bridge between the Executive Branch and Congress, members of both parties, if we are 

going to make progress on these very difficult economic and political questions related to the national debt. 

So I do not really invite an answer. I think you answered it in 

what you said in your opening statement. 

First, let me ask this, and I think maybe you suggested an answer to this. We are facing two enormous economic challenges now, 

both of which you will be involved in responding to. One is to sustain the economic recovery and have our economy produce more 

jobs. The second is to begin to reduce the national debt. 

9 

Am I correct in assuming that you agree that the immediate priority is economic recovery and job creation? 

Mr. LEW. I think there is nothing more important facing us today 

than encouraging economic growth and creating jobs. We are at the 

beginning of a recovery, but it is not as strong or as deep as we 

want it to be. We cannot rest comfortably while we have 9.5 percent unemployment and while millions of Americans who want to 

work are looking for work. 

What I do not think is that one has to wait to take action. One 

can take action that does not have impact immediately. 

Chairman LIEBERMAN. Action regarding the debt? 

Mr. LEW. Yes. 

Chairman LIEBERMAN. Yes. 

Mr. LEW. I think that it is a mistake for us to wait until we have 

the kind of growth that we all want before we start thinking about 

taking steps that would show a real dedication to turning the corner at a period of time when the economy is, in fact, growing at 

a more healthy rate. It takes a long time to make changes in the 

Federal budget, whether it is the spending or the tax side, and if 

we wait and do them seriatim, I fear that we will lose the confidence that is needed, that the government officials are taking seriously the challenge that faces us very soon. 

Chairman LIEBERMAN. That is a very important point. So you are 

saying with regard to economic recovery, jobs first, but that does 

not mean we cannot begin to act on the reduction of the debt. And 

I also take you to be saying that if we did begin to take action on 

debt reduction, that itself probably would have a positive effect on 

the economy. 

Mr. LEW. I believe that there is a fear in the country, both 

amongst the public and in the case of investment amongst businesses, that Washington may not understand how much of a problem it is to look at deficits that are growing at a rate that shows 

no natural turning point, the debt showing no natural turning 

point. 

I do not think last year or this year was a time when it would 

have been appropriate to cut the deficit or to try to reduce the debt. 

The need to get the economy moving again was of paramount importance. When President Obama took office, the economy was in 

a free-fall. There needed to be a floor, and I think the Recovery Act 

and other actions taken had a real impact. Millions of jobs were 

created. The unemployment rate is several points lower than it 

would be otherwise. I think what nobody knew was how deep the 

recession was, and when one is facing a recession of historic proportions, I do not think it is surprising that we will only know looking back how deep it really was. 

At the same time, business cycles, even bad business cycles, come 

to an end—— 

Chairman LIEBERMAN. Right. 

Mr. LEW [continuing]. And I think there is an expectation that 

we should be able to look beyond this year and next year and say 

that 3 years, 4 years, 5 years from now, we know that there need 

to be measures in place. And I think that the question of waiting 

until then to start having the kind of consensus formed to take action will cause a loss of confidence. 

10 

In the private sector right now, there is a widespread understanding that businesses are sitting on enormous amounts of cash 

and not investing. There are trillions of dollars in cash that businesses are sitting on. If we could contribute to the confidence that 

would unlock the willingness to invest, that would have an enormously positive impact on the economy. 

I do not think it is one cause. I do not think it is as simple as 

if we take action on the deficit, then the next day, there will be an 

immediate response. I think it is a factor contributing to it because 

there has not been the sense that it is being taken seriously. 

Chairman LIEBERMAN. I agree. I referenced the letter that Vice 

President Biden sent, actually on behalf of himself, Majority Leader Harry Reid, and Speaker Nancy Pelosi, to Senator Conrad and 

a group of us who had been negotiating because we had actually 

wanted to put a statutory proposal forward on a deficit reduction 

or debt reduction commission and a mandatory vote afterward, confirming that the Administration and the legislative leadership 

would commit to a vote in this Congress, that is presumably in December, after the Bowles-Simpson Commission reports. 

I know now you were made aware of that in the staff interviews 

with you. Do you support that? It is a commitment, so I hope it can 

be honored. Do you think it is possible, consistent with what you 

have just said, that we might actually be able to take some first 

steps, even if their implementation is longer term, on debt reduction before the end of this Congress? 

Mr. LEW. I have read the letter, and I am familiar with the 

agreement, and I think it reflects the President’s agreement and 

the Administration’s agreement that there should be immediate action taken on recommendations from the Commission. 

The Administration has been careful not to prejudge the outcome 

of the Commission, to try to leave room for the Commission to do 

its work in a way that is not subject to the day-to-day pressures 

of the political process. I do not know whether there will be something issued in a form that is ready to be voted on, but I think that 

letter reflected the commitment that when there is something that 

is ready to be voted on, it should be voted on. 

Fundamentally, it is obviously a congressional decision when to 

schedule a vote, so even if confirmed, it will be something that ultimately requires the congressional leadership to follow up and 

schedule. But I think it does reflect the Administration’s serious 

commitment that the results of the Commission should be brought 

forward. 

Chairman LIEBERMAN. Very good. Thank you. Senator Collins. 

Senator COLLINS. Thank you, Mr. Chairman. 

Mr. Lew, you just testified that businesses are sitting on cash. 

They are not investing; they are holding back. And that is certainly 

what I have found in my conversations with business leaders of all 

sizes. One reason is because of the problems on the debt and 

spending side, but the other reason is the uncertainty about whether taxes are going to go up come January 1. 

I quoted in my opening statement from your predecessor’s op-ed 

in the New York Times in which he argued that allowing the tax 

relief to expire would make the already stagnating jobs market 

worse. Peter Orszag went on to say, ‘‘Higher taxes now would 

11 

crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt.’’ 

Do you agree with that? 

Mr. LEW. I think that the article went on to argue that 2 years 

from now, all the tax cuts should be allowed to expire, so I am not 

sure that the recommendations in that article would produce the 

kind of confidence that you are describing. 

My view on the issue of the tax cut, the President has made clear 

that he thinks the tax cut should be extended on all income for 

families at $250,000, for individuals $200,000 and below, and that 

means all individuals, whether they are above or below the line, 

the first $200,000, $250,000 of income, the taxes on that should be 

extended. 

He has equally made the case that it would be wrong to extend 

the tax cut above that line. The distribution of the tax cut above 

the line is heavily weighted at the very high end. It is partners in 

law firms. It is partners in financial institutions. It is not, for the 

most part, in the areas that people argue it is, which is the hands 

of small businesses in the communities. 

I do not believe that it would be appropriate to take $700 billion 

over the next 10 years and devote it to a tax cut for the wealthiest 

Americans. I guess as a matter of fiscal policy, I do not believe it 

would stimulate the economy. I think that where there are savings, 

it is not contributing right now to economic growth, since what is 

driving growth right now is consumption. 

I think that if we were to follow the program that the President has advocated, to make permanent the tax cut below $250,000 and 

$200,000, it would be a very positive thing, and I believe it is correct that this would be the wrong time to increase taxes on middleclass Americans. 

Senator COLLINS. So you oppose even a 2-year extension of the 

current law and would allow taxes to go up on January 1, is that 

correct? 

Mr. LEW. What I have said is, I think that the tax cut below 

$250,000 and $200,000 should be made permanent. There is an 

array of other tax proposals that the Administration has proposed. 

So there would be a net tax reduction if the Administration’s tax 

program was adopted. So I am not advocating a tax increase, no, 

but I am saying that the tax cut—— 

Senator COLLINS. Well, you are advocating a tax increase for 

anyone above $250,000, and that includes some 750,000 small businesses that are Subchapter S Corporations and that employ literally 20 million Americans. As the Blue Dog group in the House 

has pointed out in its letter, 25 percent of national consumer 

spending is the result of those in those upper tax brackets. So I do 

not see how you can say that there would not be a negative impact 

on demand and on the economy if we hit those individuals with a 

substantial tax increase and those small businesses with a substantial tax increase come January 1. 

Mr. LEW. I think that it is very important to stimulate small 

business investment, and there is an array of proposals that are 

pending that would have the effect of encouraging small business 

investment. I think that if what we want to do is encourage small 

business investment, that is the right route to go, to reduce the tax 

12 

burden for small businesses rather than to have a tax cut that 

would continue to benefit the very wealthiest Americans, which I 

do not think has been proven to have the kind of benefit in terms 

of job creation or stimulus that we need. 

So I agree that it would be the wrong time to allow the tax cut 

for people earning $250,000 and below to expire as that would have 

a very detrimental effect. That is why the President has proposed 

extending it. I think there are more effective ways to encourage 

small business. 

Senator COLLINS. Let me turn quickly to the spending side of the 

ledger. The Republicans on the Appropriations Committee have endorsed a bipartisan proposal by Senators Jeff Sessions and Claire 

McCaskill that would essentially freeze discretionary spending for 

fiscal year 2011 at this year’s level. That saves over the next decade $296 billion. Do you support that proposal? 

Mr. LEW. The Administration has proposed freezing non-security 

spending for 3 years. It would bring us to the slowest rate of 

growth and the lowest levels of discretionary spending as a change 

in modern times. 

I am familiar with the proposal that Senators McCaskill and Sessions have proposed. I know that the Administration has taken a 

look at it and has generally supported the notion that we need to 

be focusing on reducing spending. My own view, and this really 

comes from the success of past budget agreements, is that caps on 

discretionary spending, when they are part of an overall budget 

agreement, are very effective and that the right place to have the 

debate about long-term caps on discretionary spending should be 

when everything is on the table and we are able to make real 

progress. 

The thing I fear is discretionary spending, while it is very important and we need to constrain it, is a small part of the total problem, and if the only thing we do is address discretionary spending 

and we do not address other forms of spending and we do not address the tax system at all, we are not going to be in a place where 

we have really turned the corner. 

Senator COLLINS. My time has expired. We will continue this debate, I am certain. 

Chairman LIEBERMAN. Thanks, Senator Collins. 

As is the Committee’s custom, we will call Senators in order of 

arrival. For the Senators’ information, that is Senators Akaka, Carper, Tester, Brown, and Levin. Senator Akaka. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Thank you very much, Mr. Chairman. 

I would like to add my welcome to Mr. Lew and his family to this 

Committee. With so many of the challenges facing our Nation at 

this critical time, I am pleased that President Obama has nominated someone with Mr. Lew’s unique experiences and credentials 

to be the next Director of the Office of Management and Budget. 

And, Mr. Chairman, I would like to include an opening statement 

in the record. 

Chairman LIEBERMAN. Without objection, so ordered. Thanks, 

Senator Akaka. 

13 

Senator AKAKA. Mr. Lew, OMB is often thought of as the ‘‘Budget Office,’’ but it has a critical role in driving and overseeing effective government management. During this Administration, OMB, 

with the leadership from Deputy Director for Management Jeffrey 

Zients, has been active in this role. For example, OMB has 

partnered with the Office of Personnel Management to push efforts 

to reform the Federal hiring process. What are your key priorities 

for government management, and how do you envision working 

with Mr. Zients to accomplish them? 

Mr. LEW. Thank you, Senator. I have had the pleasure of working with Jeff Zients in his role as Deputy Director for Management 

because as a Deputy Secretary, I have been a member of the President’s Management Council, and I, too, have been very impressed 

with his performance in that role. 

I think it is a very important role. The budget demands on OMB 

take a lot of time and a lot of attention, and the challenge, I think, 

for OMB as an institution and for an OMB Director is not to let 

the budget issues dominate so completely that you cannot focus on 

running the government well. 

I tried, when I was at OMB the last time, to do it in two different 

ways. First, I focused on priority management issues. There was a 

list at the time of 10 or 12 issues where I was engaged with the 

Deputy Director for Management and the appropriate program office, trying to solve specific agency problems, where they came to 

me on a periodic basis and I was part of the management team. 

You cannot do it on 100 issues. If you try to do it on 100 issues, 

there just would not be time. But if you identify the top 10 or 12 

issues, you can do it, even with the busy schedule that an OMB 

Director has. 

I think there are also functional areas that really require attention, and while the Deputy Director for Management has the fulltime job, the Director needs to be engaged. When I was at OMB 

the last time, information technology (IT) procurement was one of 

those areas. I think it is still one of those areas. I think contracting 

reform is another one of those areas. And I think performance 

management is another one. 

Performance management was relatively new when I was at 

OMB. The Government Performance and Results Act (GPRA) was 

adopted when I was at OMB. The initial implementation happened 

when I was there. I would say it is still coming of age. We still 

have not gotten to the point where it is so tightly connected to 

what agencies are really trying to accomplish that it is helping to 

focus the attention of the agencies and OMB as much as I think 

it should. I think it has made great progress. It is considerably 

more effective than it was 10 years ago. But I think it still needs 

the attention of the Director, as well as the Deputy Director. 

Senator AKAKA. I am glad you mentioned performance. Mr. Lew, 

during your previous tenure at OMB, you oversaw the implementation of the Government Performance and Results Act, which provides policy makers data to improve government performance. 

After nearly 20 years under GPRA, do you believe the law is meeting its objectives and could it be refined or strengthened? 

Mr. LEW. I think it has helped, and I think it is not necessarily 

a question of the law that needs to be changed but a question of 

14 

how the law is implemented and used. I think that there was a period of time when performance measurement kind of shifted away 

from the core objectives of agencies and became less directly central to the question of are we getting done what we have set out 

to do. I think we are coming back to trying to measure the performance of an agency against what it puts out as its goals. 

I think it is important in any performance measurement system 

to separate the question of how we determine our core values, what 

do we need to do, from the question of are we doing it well. If you 

take an example of educating children K to 12, if you find out that 

your programs are not as effective as you want them to be, that 

does not mean you do not care about educating children K to 12. 

It means you have to take the resources and use them better. 

I think in the early days of GPRA, there was a fear that any indication of a performance weakness would lead to a funding cut, 

and I think if you really care about the objectives of an agency, 

GPRA ought to be a way to take the resources and focus them on 

high-performing ways of reaching your goals. It ought not to be the 

threat that the money will move to some other objective. 

I think that is a culture change. I think if agencies fear that an 

honest assessment means they will lose money, we will never get 

honest assessments. It has to be that if the commitment is, these 

are our core priorities, we will find a way to do it better, and I 

think that is a question of time, and it has been a long time, I 

know. Twenty years is a long time. But I do not think that we are 

yet at the place where it has come together the way I would hope 

it does. 

Senator AKAKA. Mr. Lew, I am very concerned with protecting 

the privacy of Americans’ personal information. In particular, I 

have been a strong advocate of enforcing current privacy laws at 

agencies and strengthening areas that may be weak. Unfortunately, many agencies do not have a comprehensive or robust privacy office and may lack clear guidance for how to manage privacy. 

There is no single government-wide privacy point person to provide 

leadership on these issues. 

Do you believe that OMB should designate a senior privacy official to ensure that all agencies are properly protecting Americans’ 

privacy? 

Mr. LEW. I think it is critically important that OMB play a very 

significant leadership role, ensuring that government programs are 

implemented in a way that protects the privacy of Americans, and 

I think that there are a number of offices at OMB, the Office of 

Information and Regulatory Affairs (OIRA) and the Office of EGovernment, that spend a good deal of their time working on those 

issues. 

When I was at OMB, we had a privacy counselor. We did not 

have an E-Government Office. I think that there are a lot of ways 

to organize and to do it effectively. What I know for a fact is that 

this Administration takes privacy issues very seriously, and if confirmed, as I get more familiar with how the operation is working, 

I will develop my own view as to whether the current organization 

works. 

I have no doubt that the current commitment is real and that it 

is a question of whether the current organizational structure 

15 

works. I have no reason to believe it does not. I have met with the 

people who run these areas. They share the values that I have described, and I look forward, if confirmed, to being able to come back 

and give you a report after I have more firsthand knowledge. 

Senator AKAKA. Thank you very much, Mr. Lew, for your responses. Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thanks, Senator Akaka. Next is Senator 

Carper. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Thanks, Mr. Chairman. 

Mr. Lew, it is good to see you and your family. I will just ask 

you to remember you are under oath as I ask this question. Looking at your biography, I note that you went to work for Tip O’Neill 

in, what was it, 1979? 

Mr. LEW. Correct. 

Senator CARPER. Is it true that you were 14 at that time? 

[Laughter.] 

Mr. LEW. Well, I think I was 24 when I went to work for him. 

Senator CARPER. Well, the years have been kind to you. 

I want to go back to 1997, when we last made a real serious run 

at budget deficits. Who was the Deputy Director of OMB at that 

time? 

Mr. LEW. I think John Koskinen was still there. I do not remember—— 

Senator CARPER. Deputy Director? 

Mr. LEW. For Management, you said? 

Senator CARPER. No, just Deputy OMB Director. 

Mr. LEW. Well, I was the Deputy Director of OMB in 1997—— 

Senator CARPER. Thank you. Who was the Chief of Staff for 

President Clinton at that time? 

Mr. LEW. In 1997? I think it was—— 

Senator CARPER. It was Erskine Bowles. And what does he do 

now? 

Mr. LEW. Erskine Bowles chairs the Deficit Commission. 

Senator CARPER. That is what I have heard. And you have a 

chance of becoming our OMB Director. So it is kind of like deja vu. 

Mr. LEW. Well, as I was making the rounds over the last couple 

of days, appointments with Members of this Committee and the 

Budget Committee, I did run into Erskine Bowles and Senator 

Alan Simpson in the hallway because we were talking to the same 

people. 

Senator CARPER. Were they humming, ‘‘Happy Days Are Here 

Again’’? 

Mr. LEW. I was encouraged that they were in a lighter spirit 

than I would have expected. 

Senator CARPER. Good. That is what I have heard. 

Back in the mid-1990s, the Congress passed and President Clinton signed legislation to provide the President with something like 

line item veto powers. I thought it went way overboard. It provided 

not only the ability to the President to line item all kinds of spending, tax policy, and entitlement programs, but it required a twothirds override in both the House and the Senate to stop what the 

16 

President wanted to do. It was declared unconstitutional by the 

courts. I do not think the vote was even close. 

A couple of us on this Committee, Senator McCain, Senator Russell Feingold, who is not on this Committee, but we have offered 

legislation to call for, I think, a more reasoned approach, one that 

is believed by most legal experts to be constitutionally sound, and 

that is to really provide what I call a 4-year test drive for the President’s rescission powers. The President can sign spending bills into 

law and then send a rescission message to the Congress asking 

that spending be reduced in all kinds of ways. Our legislation is 

more measured. We have let the President for 4 years have the 

power to submit rescission proposals back to the Senate after signing a spending bill, but would not allow him to go after entitlement 

programs, would not allow him to go after tax provisions, would 

allow him to propose rescissions in appropriated spending. 

The other thing that is different about our proposal is we would 

have to vote affirmatively for the proposal. We could vote it down. 

A simple majority in the House or Senate would stop the rescission, 

basically kill the rescission, but we would have to vote on it. As it 

turns out, as you know, most times when the President sends a rescission message to the Congress, it is ignored, and we just never 

do anything about it. 

Some people think most governors have line item veto powers 

that go beyond what I just described. Some people think that is all 

we need to do to reduce the budget deficit. That is not all we need 

to do. We need this freeze on overall domestic discretionary spending. We need to do what Secretary Robert Gates wants to do, like 

taking $100 billion out of the defense budget. We need for this Deficit Commission to do good work. We need to go after all kinds of 

waste, fraud, abuse, improper spending, and all that. 

But let me have your take on this proposal of Senator Feingold, 

Senator McCain, and myself, the 4-year test drive to enhance the 

President’s rescission powers, which I think has been endorsed by 

the President, by the way. 

Mr. LEW. Yes. I think it is important to have as many workable 

tools as we can to try to get our hands around reducing spending 

when it is not of the highest priority and when it could be reduced 

without doing damage. 

I was at OMB when the line item veto was passed. I had the unpleasant task of reviewing all of the laws that were subject to it. 

And I must say, it was not just the Supreme Court that had questions with the workability of that law. Going through it, just analytically, it was very challenging. 

I think that what has been designed seems to me to be a more 

workable approach. While I am a lawyer, it is not an area of law 

that I have special expertise in. I think it is more likely to sit past 

scrutiny than the line item veto in the 1990s. 

I think the question with any of these mechanisms is: Is there 

a will to use it? Is there a will to make hard decisions? Because 

everything that would be subject to an enhanced rescission had 

supporters and sponsors or it would not have been there in the first 

place. And the challenge of identifying the list is one part of it. 

Then the challenge of having the will to reverse decisions is another. 

17 

The line item veto that was found to be unconstitutional kind of 

took it out of the legislative process, which is one of the reasons 

that it was overturned. This will put it back in the legislative process, so it will be a two-part process. 

Senator CARPER. As I said, I am not sure if we will have a 

chance to vote on this proposal this year. I think we have had a 

couple of hearings. We had a hearing on an earlier version of this 

proposal offered by Senator Feingold and Senator McCain. We had 

a hearing on an earlier version of this proposal that I think 20- 

some of us had cosponsored. We have about 23 cosponsors of this 

latest version, which has been endorsed by the President, and we 

may want to tweak it further before we bring it up for a vote either 

this year or sometime early next year. But we look forward to 

working with you, and I appreciate the history of your involvement 

with this and your knowledge. You bring a lot to the table with respect to this tool. 

The last thing I want to raise is the tax gap. We are told that 

it is over $300 billion, money owed, not being collected by the Department of the Treasury. And there are a number of us who have 

worked in a piecemeal fashion and in some cases in a coordinated 

fashion to try to reduce the amount of money that is owed by individuals, by companies, that is not being paid, not being collected. 

Any thoughts you have for us on how we might work with you to 

take that $300 billion number and start squeezing it down? 

Mr. LEW. When I was at OMB the last time, we tried to add additional resources for tax enforcement in order to try to close that 

tax gap. I think it is effective to add enforcement resources because 

ultimately, enforcement or the expectation of enforcement is a powerful stimulus to compliance. 

I actually think this is an issue that is beyond its fiscal importance, just in terms of confidence in the tax system. Taxpayers of 

comparable income should feel that they are being treated fairly, 

each to the other. It is not a good thing for the confidence in the 

tax system for there to be this sense that people can get away with 

noncompliance. 

So I think it is an important matter of public policy. It is an important matter of fiscal policy. And I cannot say that I have current 

detailed knowledge of what the enforcement resources are, but I do 

know that in the 1990s, we thought one of the solutions was to increase enforcement, and I would look forward to working with you 

and with the Treasury Department on approaches that would be effective. 

Senator CARPER. Good. I would just note, Mr. Chairman, for the 

record that this is not a Democratic or a Republican idea. It is not 

an Independent initiative. It is just, I think, good policy. We have 

worked together on a lot of stuff and my hope is this may be one 

that we can work together on, as well. Thanks. And frankly, a 

bunch of us introduced legislation today to do just that. Thanks. 

Chairman LIEBERMAN. Thanks, Senator Carper. Senator Collins 

and I always enjoy your cross examinations of the witnesses, as 

you began today. 

Senator Tester, you are next. 

18 

OPENING STATEMENT OF SENATOR TESTER 

Senator TESTER. Thank you, Chairman Lieberman, and thank 

you, Mr. Lew, for being here today, and I appreciate your stopping 

by my office so we could have a visit earlier this week. Thank you 

for your service. Thank you for your repeated tour of this office. I 

think that your expertise and experience in this brings a unique 

quality. You have been there and done that. You have the budget 

surplus credentials behind you, and such significant ones during 

the Clinton Administration that I look forward to your service in 

this job. 

As we move forward and talk about things like the debt, which 

is talked about a lot here, you, more than anyone in this room, understand there are going to be some difficult decisions that have to 

be made, whether it is on the income side or the expenditure side. 

With a lot of those decisions, there has to be a level of education 

so that people get the facts to know what the impacts are and the 

real benefits to any decisions that are made to address the debt because they are going to be difficult. Do you see a role for OMB in 

that education process? 

Mr. LEW. I think that OMB has an enormously important role. 

Well, it has two very important roles. One is the analytic expertise 

and being able to provide information, which is the way you educate people on this. You make it transparent. You make it clear. 

And you do it in a way where the numbers have integrity, and it 

is not a war about whose numbers do you use. 

I think the other is that OMB plays an important role in the policy making process in the Administration, and I think the voice of 

OMB at the table is a voice that is both about what are the important goals, but it is also about how do you accomplish it? How do 

you make it work? How do you make the macro decisions work, 

and then when it is a series of individual pieces, how do you make 

them effective one by one? 

I think OMB at its best is a partner not just to the President, 

but to every agency of government and to the Congress. When 

OMB is in the room early, my experience was it led to more satisfaction in terms of the outcome on the part of all the participants. 

Senator TESTER. But from an OMB perspective, how do you get 

that information out to the public, or is this something OMB can 

even do? 

Mr. LEW. OMB does not have a direct public program the way 

a lot of other agencies do, but increasingly in this day of e-government and putting things out on Web sites, what I have noticed is 

different now than 10 years ago is you can look at the Web site and 

you can get information to the public. It is not forced on the public. 

The public has to go there to look for it. But there is much more 

accessible information than there was. 

One of the things that I think the leadership of OMB has to do 

is speak to these issues before Congress and publicly. It cannot just 

be something we have private conversations about. I did some of 

that when I was at OMB the last time. It may be that this is a 

time where there is a need for more of that. I do not have a strong 

sense yet of what the time demands are. 

Senator TESTER. Montana is one of the few States that is not in 

a budget deficit situation. It did not happen by accident. There was 

19 

some outstanding work done by the Governor of the State of Montana to put some money aside when times were good. That did not 

happen in this country. When times were good, the budget deficit 

continued to rise and we did not put any money aside. Do you see 

that as being a potential long-term solution for budget deficits, and 

if you do, how would that be done? 

Mr. LEW. Well, last time I left OMB, we were putting money 

aside, we thought, for the bad times. One of the arguments we 

made about protecting the surplus was that it would be a cushion 

for future times when we might need it. I thought it was a very 

ill advised decision to suspend pay-as-you-go (PAYGO) kinds of 

rules and have spending and tax policy made without the constraints of fiscal discipline for an extended period of time. I am not 

talking about the response to the recession. I am talking about in 

times when it was not required to have a deficit to get the economy 

moving again. 

I think you have to look at a cycle. There are times when a deficit is a very good thing, and that is, I think, the case for the last 

2 years. When the economy is growing at a good rate, there ought 

not to be a big deficit. We need to get back to a place where we 

can, at a minimum, eliminate the deficit that is not related to reducing the debt, and then we have to get beyond that and start to 

reduce the debt so that we can reduce our interest payments. 

I wish I could say I thought that was something I saw in the 

very near term. Realistically, that is quite a ways down the road. 

But you have to do it one step at a time, and the Debt Commission’s mandate to reduce the deficit to 3 percent of GDP, to come 

up with proposals, would eliminate the deficit other than the service of the debt. I think it is a worthy goal, and it is a goal we have 

to focus on. 

Senator TESTER. I would agree, and I would hope that when the 

Deficit Commission comes back with their recommendation, we do 

not look for reasons to vote against it but rather look for reasons 

to vote for it so we can get our arms around the debt. 

The last thing I want to talk to you about is contracting. We visited a little bit about this in my office. I do not think there is any 

disagreement that contracting is, especially for small business, a 

complicated thing. It can take a lot of time and it can take a lot 

of staff, and quite frankly, in a State like Montana, we end up with 

a lot of businesses that just say, the heck with it. 

What I see happening at the Federal level is they are kind of 

using big general contractors and then subcontracting and hoping 

some of the small guys get it. Can you give me your perspective 

if anything can be done from your potential position as OMB Director to really encourage more contracting so that small business— 

not to tilt the field toward small business, but at least level it— 

could get a shot at it? And I am not talking about small business 

as businesses, again, under 500 people. I am talking about small 

businesses. 

Mr. LEW. I think it is important that we maintain access to Federal contract work on a broad basis. I think it is important for two 

reasons. One, there are very important enterprises that ought to 

have a chance for their own benefit to get the work, but I think 

from the perspective of the public good, there ought to be the kind 

20 

of competition that comes from knowing that if you are big and you 

do it, you do not have a lock on it, that somebody else might be 

nipping at your heels to take the work back. 

Senator TESTER. Thank you. 

Mr. LEW. I do not know what we can do immediately. When I 

look at the contracting issues now, one of the things I am struck 

by is that Federal agencies are woefully understaffed in some of 

these areas in terms of the contracting professionals to make sure 

that the specifications are well designed, the monitoring is well implemented. One of the reasons there has been a drift to large contracts is it is easier to manage, with the number of people who are 

in agencies to do it, fewer pieces of work. 

I do not think I can say I see a huge growth in the Federal workforce as being the immediate solution, but I think we have to recognize that there is a tension there, that if you ask someone to go 

from one contract to 50 contracts, they are going to need some help. 

Senator TESTER. Absolutely. Well, thank you very much. I wish 

you all the best. Hopefully, you will be confirmed quickly and 

unanimously. I just think you are a great person for the job and 

bring some real common sense to a position that needs it. Thank 

you. 

Mr. LEW. Thank you, Senator. 

Chairman LIEBERMAN. Thanks, Senator Tester. Senator Brown. 

OPENING STATEMENT OF SENATOR BROWN 

Senator BROWN. Thank you, Mr. Chairman. 

It is good to see you again. I appreciate your coming into my office. And I am glad that we have somebody that is going through 

the actual process of coming before the Committee. Being the new 

guy here, I have to admit I have enjoyed learning about our candidates, and I am hopeful that in the future other candidates will 

come forth like you and look for a full and fair vetting so we can 

learn about what your thoughts and ideas are, and I am hopeful 

the Administration will start to do just that. 

I know Senator Collins touched a little bit on the tax increases 

that will happen if nothing is done. I have concern that in the middle of a 2-year recession, we are going to be raising anybody’s 

taxes. Some of those folks that are making $250,000 and up you 

cited, the lawyers and all those that traditionally people do not 

like, but they are also involving LLCs and small businesses that 

use their Social Security number that are actually creating jobs 

and that are also caught in that net. Two-hundred-and-fifty-thousand dollars in Massachusetts may be different than $250,000 in 

Montana, when you throw in the fact that you get absolutely no aid 

or assistance for college and the cost of living is traditionally higher. And these are, many times, the job creators, as well. 

I am also hopeful, and I am going to vote for you, as I told you, 

as well, but I think it is important for you to take a message back 

to the President that singling out various categories of people in 

the middle of a 2-year recession to bear a larger burden of the tax 

burden, I do not think, is appropriate at this point in time. 

But I was wondering if you have any position or recommendation 

on potentially a top-to-bottom review of every Federal program to 

21 

save money, streamline, and consolidate. Do you have a position or 

a recommendation on that? 

Mr. LEW. Senator, if I may, just on the tax issue, the tax rate 

on people earning $250,000 or above would go back to a tax rate 

that is still lower than the tax rate that was in effect during the 

1990s when we had the longest period of economic growth. So I actually think there is a lot of experience. We are not talking about 

an increase that we have not had experience with. We are talking 

about having it revert to something that was in place when the 

economy was quite healthy. 

Senator BROWN. Right, but just to counter that, with all due respect, we did not have the economic meltdown that we are having 

now—— 

Mr. LEW. No, we did not. 

Senator BROWN [continuing]. So it is a totally different circumstance, in the middle of a 2-year recession, to think of raising 

anybody’s taxes, coupled with the second-highest corporate tax rate 

in the world and a whole host of other regulations and burdens. I 

feel it is one of the worst business climates around in quite a while. 

Mr. LEW. I guess my core concern is that the tax cut for middleincome, middle-class Americans is where the real economic engine 

is and that is the piece where I think we are in total agreement. 

It would be a mistake to let that tax rate go up at the beginning 

of the year, and that is where the real economic benefit of the country is. 

On the question of reviewing Federal programs, one of the responsibilities of the OMB Director, and if confirmed, I would undertake this almost immediately upon going to OMB, is to do a review 

of every agency of the Federal Government. It is an exhaustive 

process and an exhausting process. It is the way that you use the 

very capable staff at OMB to ask questions about every program 

in the Federal Government. 

I took that process very seriously when I was there the last time. 

It is something that I know, if I am confirmed, I will again take 

seriously. I think that we cannot accept that everything we did before has to be done exactly the same way in the future. I have tried 

to manage the State Department that way, shifting resources 

around to accomplish our highest priorities, and not to just accept 

that what was the case last year is the case next year. 

I do not think it requires a new bureaucratic process to do that. 

The process that exists, if taken seriously, gives you the ability to 

make recommendations to the President, and if confirmed, it is 

something I would, I believe, spend the month of October and November deeply involved in. 

Senator BROWN. I just want to go through kind of a checklist. Do 

you have any position or recommendation with regard to a freeze 

on Federal hires or pay increases for Federal employees? 

Mr. LEW. You know, I think that the question of a freeze on Federal hires—— 

Senator BROWN. Non-essential, I am talking about—— 

Mr. LEW. Well, we should never have non-essential positions. I 

mean, we should give people work that is essential. We should not 

be having jobs that are not essential. 

22 

The reason I am hesitating is that the contracting issue, this is 

something that if we want to move functions into government and 

it costs us more to do the work by hiring a contractor than it does 

to hire a government employee, I think we need to move away a 

little bit from the notion that it is just head count that matters. 

It is what does it cost to get the work done most effectively. 

Senator BROWN. Right. 

Mr. LEW. I do not know the answer to that—— 

Senator BROWN. Well, I am glad you are bringing it up because 

I do have a question on acquisition reform and dealing with contractors. As you know, there are many contractors that have been 

overpaid. There is some type of fraud or waste and abuse. And 

there have been instances, not only are they getting their contracts 

renewed, but they are actually getting a bonus for doing faulty 

work. Is that something that you can get—— 

Mr. LEW. I think we need to look at these issues. Early on in the 

Administration, the President put this out as an issue that he 

wanted the agencies to take very seriously. I know at the State Department, I have put a lot of time into looking at how we do contracting in the State Department and the U.S. Agency for International Development (USAID). It is a very difficult area to make 

quick change in because you do not have the personnel to take over 

the work unless you hire more people. And the question becomes, 

do you stop doing things or do you do it the way it was done? 

Senator BROWN. Well, you need to do it at least on a competitive 

basis. With some of the ways these contracts are written, I have 

never seen anything like it. 

Mr. LEW. It should be done on a competitive basis—— 

Senator BROWN. Do you have any position or recommendation 

with regard to giving the President the ability to have a line item 

veto? 

Mr. LEW. I just was responding to questions from Senator Carper 

on the enhanced rescission. The last time a line item veto was enacted, the Supreme Court overruled it. 

Senator BROWN. Right. I remember that conversation. What is 

your position? 

Mr. LEW. I supported the line item veto at the time. I helped to 

implement it, and the Supreme Court overruled it, so I think it is 

probably sensible to look at mechanisms that are more likely to 

withstand judicial scrutiny. 

Senator BROWN. Do you have the ability through your position to 

make a recommendation or what is your position on entitlement 

issues? Do you make recommendations to the President on that? 

Mr. LEW. OMB reviews all aspects of the budget, including all 

the entitlement programs. 

Senator BROWN. Is that an area you feel you will be making 

changes or making recommendations to the President on? 

Mr. LEW. I would imagine. It is an area where every year there 

is a set of mandatory provisions in the budget, and I assume that 

I would continue the practice of reviewing all programs of the Federal Government. 

Senator BROWN. Well, in conclusion, I just want to wish you well. 

As you know, I told you before that I think you are one of the most 

qualified people for this job, and I am excited to be able to cast my 

23 

vote, make it pretty public. As I said, I am a straight talker. If 

there is anything my office or the Chairman and the Ranking 

Member can do to give you the tools and resources you need to do 

it better, please let us know. 

Mr. LEW. Thank you, Senator. And as I said when we met in 

your office, it has always been a close call whether I call myself a 

son of New York or a son of Massachusetts. Many people get me 

confused. 

Senator BROWN. Well, I did not think I would be here, and I 

apologize, but I wanted to come and inquire and give you my support. Thank you. 

Mr. LEW. I appreciate it. Thank you very much, Senator. 

Chairman LIEBERMAN. Thanks, Senator Brown. Senator Brown is 

a straight talker—— 

Senator BROWN. So are you. 

Chairman LIEBERMAN. And it has gotten both of us in trouble. 

Senator BROWN. Absolutely. [Laughter.] 

Chairman LIEBERMAN. But the fact that he said what he did 

really sort of validates the asset that you have and the credibility 

you are bringing into this, and we want to make sure when it is 

over you still have that credibility. 

Mr. LEW. I hope that I can do that. 

Chairman LIEBERMAN. Because I am so supportive of your nomination, having heard this bi-State loyalty, I am not going to ask 

you whether you are a Yankees or Red Sox fan. [Laughter.] 

Mr. LEW. Well, it is actually an easy question to answer. I am 

a Mets fan. [Laughter.] 

Chairman LIEBERMAN. That is perfect. 

Mr. LEW. It made it possible for me to be a Red Sox fan. 

Senator BROWN. Patriots or Jets? [Laughter.] 

Chairman LIEBERMAN. Senator Collins will start the second 

round. 

Senator COLLINS. Thank you so much, Mr. Chairman. 

Mr. Lew, many people do not realize that in addition to the budget responsibilities, OMB also is responsible for the review of all significant Federal regulations to ensure that the economic and other 

impacts are assessed as part of the regulatory decisionmaking, and 

there is the office known as OIRA within the OMB that is specifically responsible. 

I want to bring to your attention a proposed U.S. Environmental 

Protection Agency (EPA) regulation that would have an enormous 

impact on our economy at a time when our economy is very fragile. 

At the end of April, EPA released draft proposed rules for air emissions for industrial boilers powered by biomass, coal, natural gas, 

or oil, and this is being referred to as the ‘‘boiler MACT’’ regulations. According to EPA, the cost to implement those rules would 

be $9.5 billion nationwide. But according to industry experts, the 

cost to implement the rules in just the forest products industry 

would be approximately $7 billion. 

In my State, Maine companies have estimated that they would 

have to invest $640 million to comply with the rules, and this 

mainly would affect the paper mills in Maine, which are already 

struggling during this very difficult economy. 

24 

Now, here is the irony. These rules also apply to hospitals, 

schools, or any entity that is using a large boiler, and I have heard 

from constituents who were planning to invest in a new renewable 

energy biomass boiler for a school, and they were going to get the 

money from the Department of Energy under the Recovery Act, 

only to find out that the boiler they would be purchasing, the new 

renewable energy biomass boiler that is encouraged by the Department of Energy, would not meet the EPA’s new rules and they 

would not thus be allowed to operate the new renewable energy 

boiler. 

So this is the kind of thing that drives the public crazy. Here you 

have one department in the Federal Government subsidizing the 

purchase of a new biomass renewable energy boiler for a school 

while another Federal agency is saying, no, you cannot put that in. 

It does not meet the highest standards. So clearly, there are discrepancies and cost issues here that warrant the review by OMB. 

The industry experts that I have talked with are very concerned 

that the standards are being set so high that they are going to 

have to make a massive new investment at a time that they cannot 

afford it. It is totally contrary to what the Department of Energy 

is doing to try to get people to move away from fossil fuels to renewable energy. 

Now, several of my colleagues on both sides of the aisle, Senator 

Landrieu, Senator Ron Wyden, Senator Voinovich, Senator Lamar 

Alexander, and I are writing to the EPA, and we are going to copy 

Cass Sunstein at OIRA to take a look at this. I am not asking you 

for your opinion on this rule today. 

Mr. LEW. I appreciate that. 

Senator COLLINS. I realize that would be unfair. But I am asking 

you to commit to taking a close look at the economic impact of this 

rule. 

Mr. LEW. Senator, I appreciate your not putting me on the spot 

because I am not familiar with that specific rule. I am familiar generally with OMB’s review of regulations, and I think it is a very 

important function that OMB has. 

I know that the record of this Administration, even compared to 

the record when I was there the last time, is that it has taken this 

cost-benefit process quite seriously, if the benefits of the rules outweigh the costs in general, and that has been a value that has been 

very important to the Director of OIRA and to the team there. 

When I was at OMB the last time, I would not say that I got 

involved in every OIRA matter, but when there were matters of 

very significant policy importance, particularly when they involved 

cross-currents between other Federal programs, I did get involved 

because it is appropriate for the Director to do that. I would intend 

to work closely with Cass Sunstein, who I have the highest regard 

for, who I think is an excellent OIRA Administrator, but I think 

it is also the Director’s responsibility to pay attention to the regulatory responsibilities that OMB has. 

Senator COLLINS. This is a really important one, and I appreciate 

that commitment. Another responsibility OMB has that is generally not known by the public, and we have touched on it today, 

is some responsibility with the Office of Federal Procurement Policy (OFPP) to set Federal procurement rules, and I mentioned to 

25 

you during our telephone call my concern that the Administration 

is considering a dramatic new government-wide procurement policy, which is ironically called the ‘‘High Road’’ policy, that in my 

view would have a severe negative impact on the ability of small 

businesses to effectively compete for Federal contracts, would increase the cost of Federal contracts, and would jeopardize the integrity of the Federal procurement system. 

We have discussed this on the phone. I am very concerned that 

this goes away from a merit-based procurement policy and will actually increase the cost of Federal contracts at a time when we 

should be going in the opposite direction and trying to introduce 

more competition, more bidders, and decrease the cost. 

So I hope, given the strong support that you have expressed 

today for competition and the need to keep Federal contract costs 

down, that you will assure me that OMB will not issue any procurement preferences that create artificial barriers to competition 

and will hurt legitimate small business bidders. 

Mr. LEW. Senator, we did discuss this particular matter, and I 

have inquired. I am not aware of a rule that has the character that 

you have described. It may be working its way through the system. 

I do know that the issue itself takes two values that are very important and requires a careful balancing. There is the very important value of encouraging competition and making contracting 

available to small business, and there is also a set of values about 

what are the kinds of protections that ought to be available in the 

workplace. I think that it is important as this is considered to 

make sure that we ultimately make decisions that promote strong 

economic activity, but we also recognize that we have a lot of areas 

where we do things that protect individuals. 

I would look forward to working with you on this. I do not have 

specific knowledge of the rule, so it is hard for me to address the 

specific issue. But I do very much understand the concern that you 

are raising. 

Senator COLLINS. Well, I was a young staffer on Capitol Hill at 

the same time you were a young staffer on Capitol Hill, both on 

the House side where there actually was an initiative that Tip 

O’Neill and Bill Cohen did together that we always called the 

Cohen-O’Neill initiative, I would add. [Laughter.] 

But when I was in the Senate, I was the staffer who helped draft 

the Competition in Contracting Act, which still governs today, and 

I can tell you that I view it, if OMB goes ahead with this policy, 

as being totally contrary to the Competition in Contracting Act. 

The Congressional Research Service also agrees that it would require legislation and could not be done by Executive Order. So I 

hope that you will proceed with great care. 

Mr. LEW. I understand the concerns, and if confirmed, I will 

learn more about this and find out what, if anything, is going on, 

and I would make the commitment to staying in communication 

with you on it. 

Senator COLLINS. Thank you. And finally, Mr. Chairman, and 

you have been most generous by allowing me to precede you, I just 

want to mention that the Postal Service is in an enormous crisis. 

It has announced a loss of $5.4 billion for the first three quarters 

of fiscal year 2010, and the Postal Service, in my view, risks a 

26 

death spiral of constantly hiking its rates, losing more volume, hiking its rates again, and losing ever more volume. And I disagree 

with many of the proposals that the Postal Service is making to address its problems. 

There is one, however, where I am very sympathetic, and that 

is the Postal Regulatory Commission has had an independent actuarial analysis that has shown that the Postal Service has been 

overpaying into the Civil Service Retirement System by between 

$50 to $55 billion, which is significant money. We have been trying 

to get the Office of Personnel Management (OPM) to redo the calculations. OPM points to a 2003 law, which was repealed in 2006, 

and it needs to recalculate what the obligation is. 

I do not want to get into that further today, nor do I expect you 

to have an answer to that today, but I am seeking attention. The 

answer is not to continually relieve the Postal Service of its health 

insurance liabilities for its retirees. We may be able to stretch out 

the amortization schedule, but those are real liabilities. But if, in 

fact, the Postal Service is paying $50 billion more than it should 

be, that should be corrected. And it is OMB and OPM that have 

the power to do that. 

Mr. LEW. This is an issue that I would not want to pretend to 

know in depth, but I am generally familiar with it, and I understand that OPM has been going through a review trying to determine to a high degree of accuracy what the overpayment estimate 

is. I also know that there are complicated issues as to whether it 

does or does not require additional legislation, and if so, whether 

or not it would obviously be subject to PAYGO requirements. If 

confirmed, I would make the commitment to learn more about it 

and, again, stay in communication with you on it. I think it is a 

separate issue from the health issue—— 

Senator COLLINS. It is. 

Mr. LEW [continuing]. And the Postal Service generally presents 

a number of issues that will need to be addressed in terms of its 

financial state. 

Senator COLLINS. And the Postal Service needs to make some 

very hard decisions to reduce its cost structure to become more 

competitive. But this is an issue we need to look at, as well. 

Mr. Chairman, I have asked our witness a number of very difficult questions today, and as I leave this hearing, I do not want 

to leave the impression that I am other than impressed with the 

nominee, despite the grilling that I may have given him on a number of policy issues. As the Chairman will attest, I have urged that 

we do a very quick mark-up so that you can get right to work—— 

Mr. LEW. Thank you, Senator. 

Senator COLLINS [continuing]. And I look forward to both casting 

my vote for you and supporting you. And again, Mr. Chairman, 

thank you so much for your courtesy. 

Chairman LIEBERMAN. Not at all. Thanks, Senator Collins. We 

are going to try to schedule a meeting of this Committee on your 

nomination as early next week as we possibly can. 

I have one or two quick questions, and actually, Senator Collins 

asked one of them, about the Postal Service. The other big problems we have talked about, economic recovery and debt reduction, 

everybody knows. For most people, including most Members of 

27 

Congress, the crisis in the Postal Service is, for want of a better 

metaphor, an iceberg that we do not see, and the management of 

the Postal Service has really been trying very hard to get ahead 

of the problem, and they have been working with the employees 

there. There have been significant reductions in the workforce. But 

the fact is that there are very profound long-term declines in mail 

volume. I will just give you the number from 2009, which is a decline in mail volume of 25 billion pieces, 12.7 percent, from the previous year. And, of course, that means deficits, $3.8 billion in 2009, 

now running comparable, even a little bit higher. 

So we have to get together and deal with this problem, and OMB 

has been involved, playing a leadership role. As you know, the reason we ask is not only because we oversee OMB, but by a strange 

twist of legislative fate and history, the Postal Service is part of 

our jurisdiction, as well. 

Mr. LEW. Yes. I think that the kind of historical change in the 

way information is handled and managed has created challenges 

for the Postal Service. The amount of work we do by e-mail instead 

of letters is a reality. 

Chairman LIEBERMAN. Right. That is exactly it. 

Mr. LEW. I know that the volumes in the Postal Service have 

shifted from First Class Mail to Third Class Mail, which is much 

lower revenue generation. I am not an expert on the Postal Service, 

but it does not take an expert to realize that there are structural 

changes that require some attention. 

Chairman LIEBERMAN. Agreed. Let me ask you one final question, to go back to the deficit reduction and just to give you a 

chance to look back, and I am asking because I think it would be 

helpful to me and perhaps others who are going to be part of this 

process later in the year or next year, to compare the economic 

challenges that you faced during the later 1990s with regard to deficit reduction and the ones faced now, if you care to, to compare 

the political environments, and just generally help us to understand what lessons you took away from that successful bipartisan 

effort to get America back in the balance that can be helpful to us 

as we try to do the same. 

Mr. LEW. I think in the 1990s, it was a very different economic 

environment, and we did not have a recession, we had growth. We 

did not have high unemployment. And what was driving the focus 

on deficit reduction was the fear that government borrowing was 

going to become an impediment to the private economy and a very 

strong message from the public and from the business community 

that the Federal Government had to be brought under control in 

order for the future of economic growth to remain bright. 

We are in a very different environment right now. We have the 

lowest interest rates of any time that I am familiar with, and we 

have not an insufficient level of economic activity. The tools that 

we have to stimulate economic growth have been used, I think, effectively, but they have had the effect of driving up the deficit. 

The challenge today is that, as I think I was saying earlier, if 

we were to put the brakes on this year or next year, I think it 

would be profoundly problematic. This year, we should not be looking for massive deficit reduction. But we will emerge with a period 

of more sustained growth. We will see unemployment coming down. 

28 

And at that point, with the very large Federal debt that we have, 

if we see higher interest rates, we are going to see the kind of pressure, both on the Federal budget and in terms of competition for 

capital, that will be a real problem in the economy. 

When you can see a problem down the road, the answer is not 

deal with it right now, but put things in place so that when you 

get there, you have planned ahead. That is not an easy thing for 

our political system to do. Part of 1983 was a somewhat engineered 

crisis where Social Security was going to run out of money and it 

would not have been able to pay the bills. It helped to focus the 

mind because not paying the bills was not an option. We are now 

in an environment where we have to create that sense of urgency, 

knowing that it is a bit farther down the road, but no less real. 

In terms of the challenges of working across the aisle, I have now 

been in this line of work long enough to have several times said 

it could not get worse than it is, only to be proven wrong, so I do 

not make predictions any more, whether it is better or worse than 

it will be in the future. What I do know is that at moments when 

you think partisanship is as bad as it can be, you still can get 

things done. In 1983, it was pretty bad. In 1990 and in 1997, it was 

pretty bad. The problems were urgent, and there were leaders who 

were willing to step forward and take action. I think if you define 

a problem as being critical to the national security and the national 

interest of the United States, leaders then can step forward. 

The prospect of unfettered deficit growth and debt growth is both 

a problem for our economy and for our national security. It is not 

a good thing if the United States loses its credibility in the world 

because it cannot manage its own fiscal affairs. I do not think we 

are there now. I do not think we are at the point where if we start 

to take action, we cannot reverse the situation. I think if we wait 

for 2 years, 3 years, or 4 years, we could get to a place we really 

do not want to be, which is why I see a sense of urgency to try to 

do this now, notwithstanding the fact that it is difficult and it will 

be very challenging to build the kind of consensus required to take 

meaningful action. 

Chairman LIEBERMAN. Well, that was an excellent statement and 

an evocative statement, too, and I agree with you. Ultimately, this 

does require leadership, and leadership that puts the national interest first. You offer a hopeful perspective because at times in the 

not-so-distant past when partisanship seemed also to be quite high, 

people did rise to the occasion. 

I agree with you. If we begin to solve this debt problem, it will 

have effects that are positive for our country well beyond the enormous positive effects it will have on our economy, and I will just 

mention two that I know you are familiar with. 

The first is that here at home, I think part of the frustration and 

anger that my colleagues and I all hear is based on, in part, a feeling that our country has lost the ability to control its own destiny, 

that we are not the America that we used to be. And a big part 

of that is the debt. Everybody understands it. People may not be 

quite prepared to do what they have to do to start to deal with it, 

but if we can work together to show that we can begin over a period of time to reduce the debt, I think it will help to restore the 

29 

public’s confidence, not just in our government, but in our country 

and its future. 

The second thing is your point, just if I may expand it a bit, on 

national security. It struck me the other day, thinking about different sections of the world, people from the Middle East and Asia, 

that there is a fear about whether America has the staying power 

here, and it is very odd that they are asking that question because 

we are probably more engaged in places like the Middle East and 

Asia than we have ever been. There are a lot of reasons for it, but 

one, I think, is that they are worried that we may be declining, just 

as the American people are worried, as a power, and one element 

of that is our inability to control our own fiscal destiny, to live essentially within our means. 

So your willingness to come back to this position at this moment 

really is an act of great public service, and I think it is an opportunity for you, it is daunting, to really make an extraordinary contribution to this country even beyond what you have already done, 

and I am grateful that you are willing to do so. 

I thank you for your testimony today. Without objection, the 

record will be kept open until the close of business tomorrow for 

the submission of any written questions or statements for the 

record, and we are doing that, as Senator Collins and I said, because we want to move to confirm you in this Committee and then 

send you to the floor as soon as possible. 

Do you have any final words to say in your defense? 

Mr. LEW. Well, thank you, Mr. Chairman. I appreciate the Committee’s cooperation and patience. While this is probably the most 

challenging undertaking I have ever looked ahead toward, it is 

probably also the most important. I look forward to being able to 

work together to make real progress because it is that important 

to our country and for the future. 

Chairman LIEBERMAN. I agree. Thank you. 

Mr. LEW. Thank you. 

Chairman LIEBERMAN. The hearing is adjourned. 

[Whereupon, at 4:43 p.m., the Committee was adjourned.] 

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