- Associated Press - Tuesday, July 13, 2010

WASHINGTON (AP) — President Obama on Tuesday nominated Deputy Secretary of State Jacob Lew to serve as director of the Office of Management and Budget, a Cabinet-level post that plays a crucial role in shaping how the administration spends the public’s money.

In a statement, Mr. Obama said Mr. Lew will be “an extraordinary asset to this administration’s efforts to cut down the deficit and put our nation back on a fiscally responsible path.”

Mr. Lew was budget director for almost three years at the end of the Clinton administration. He presided over a revenue boom of the late 1990s — when federal coffers were so flush that policymakers pressed to put surplus Social Security dollars into a lockbox so that they wouldn’t fund other programs.

If confirmed, Mr. Lew would replace OMB Director Peter Orszag, who is stepping down this month. He would inherit an extraordinary budget mess, with the deficit already exceeding $1 trillion for the first three quarters of the fiscal year. Current projections show unsustainable large deficits for the coming decade, but the administration has not devised a plan to get them under control, instead pinning its hopes on a bipartisan fiscal commission that many believe is doomed to election-year gridlock.

Secretary of State Hillary Rodham Clinton recruited Mr. Lew to serve as deputy secretary of state for management and resources, a position that was created during the Bush administration but had not been filled. In that post, Mr. Lew was instrumental in securing increased funding for State Department operations and international affairs in Mr. Obama’s first two proposed budgets.

But Mr. Lew was not a desk-bound accountant. In addition to maneuvering through the appropriations process, Mr. Lew was also a diplomat, traveling abroad to places such as Iraq, Pakistan and Afghanistan to look into U.S. assistance programs and evaluate their efficiency and effectiveness.

Mrs. Clinton said in a statement that Mr. Lew is uniquely prepared to lead OMB. “The president and the nation need his leadership,” she said.

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