Welcome Back, Jack: Lew Reckons With $1 Trillion Deficit

President Barack Obama shakes hands with his nominee for director of the Office of Mangement and Budget (OMB), Jacob Lew (L), in the Diplomatic Reception Room of the White House in Washington, DC, July 13, 2010.

It's some welcome back for President Obama's next budget director.

On the day Mr. Obama announced his intention to nominate Jack Lew to succeed Peter Orszag as budget boss, the Treasury Department put out word that the budget deficit had topped $1 trillion for the first nine months of the year.

Not quite the kind of news that would make a former budget director feel warm and fuzzy about returning to the job. Especially considering the buildup Mr. Obama gave him.

"If there was a Hall of Fame for budget directors," said the president, "then Jack Lew surely would have earned a place for his service in that role under President Clinton, when he helped balance the federal budget after years of deficits."

There was more praise to be lavished as Mr. Obama pointed out that "Jack is the only budget director in history to preside over a budget surplus for three consecutive years."

Actually, it was four years of surpluses - from 1998 to 2001 - that extended into the first year of the Bush Administration. It was also the last time the U.S. Government could claim a balanced budget.

Mr. Obama knows better than to suggest that Lew could again turn deficits into surpluses. He set a more realistic expectation.

"Jack's challenge over the next few years is to use his extraordinary skill and experience to cut down that deficit and put our nation back on a fiscally responsible path," he said.

That will take some doing considering the tsunami of red ink in which the federal government finds itself struggling to deal with.

The budget has undergone some dramatic and ominous changes since Lew's last day as Budget Director in January of 2001. Back then, the National Debt stood at $5.7-tillion dollars. Nine and a half years later, it's a hair under $13.2-trillion -- and rising inexorably.

In 2001, the Debt amounted to 58 percent of Gross Domestic Product, the value of the economy's overall output in a year. Now, it's over 90 percent of GDP, which everyone agrees is unsustainable and even ominous.

So welcome back, Jack.

The White House says it won't have the paperwork ready for Lew's nomination to be sent to the Senate for several weeks. It hopes he'll be confirmed by sometime in the fall.

Peter Orszag steps down as budget director at the end of the month. The president will designate an acting director until Lew can take over.

Mark Knoller is a CBS News White House correspondent. You can read more of his posts in Hotsheet here. You can also follow him on Twitter here: http://twitter.com/markknoller.

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    Mark Knoller is a CBS News White House correspondent.


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