Lew Skirts Question on Whether He Originated Idea of Sequestration

By Melanie Arter | February 13, 2013 | 1:22 PM EST

Jacob Lew, President Barack Obama's choice to be treasury secretary, testifies before the Senate Finance Committee. (AP Photo/J. Scott Applewhite)

(CNSNews.com) When White House Chief of Staff Jack Lew, who was nominated to replace Tim Geithner as Treasury Secretary, was asked Wednesday whether he came up with the idea of using sequestration as leverage in the fight over the budget, he evaded the question.

“It’s a little more complicated than that,” Lew said in testimony at his confirmation hearing before the Senate Finance Committee.

“You said in your testimony that we can’t let sequestration take effect. In Bob Woodard’s book, ‘The Price of Politics’ Woodard credits you with originating the plan for sequestration. Was he right or wrong?” Sen. Richard Burr (R-N.C.) asked Lew.

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“It’s a little more complicated than that, and even in his account, it was a little more complicated than that,” Lew said, adding that they were in “negotiation where failure would have meant the default of the government of the United States.”

“I hate to speed it up. Did you make the suggestion?” Burr asked Lew again.

“What I did was said that with all other options closed, we needed to look for an option where we could agree on how to resolve our differences, and we went back to the 1984 plan that Senator Graham and Senator Rudman worked on and said that would be a basis for having a consequence that would be so unacceptable to everyone that we’d be able to get action,” Lew said.

Lew was referring to the Gramm-Rudman-Hollings Balanced Budget and Emergency Deficit Reduction Act of 1985, popularly known as Gramm-Rudman, which was proposed by Republican Sens. Phil Gramm of Texas and Warren Rudman of New Hampshire.

After it was enacted, inflation-adjusted spending grew by only 1.4 percent annually, which is much lower than the 3.6 percent annual growth of the 1970s and four percent annual growth rate between 1980 and 1985, according to a backgrounder from the Heritage Foundation.

The enforcement mechanism of Gramm-Rudman was sequestration – automatic spending cuts required to bring the deficit down to the legally-required level.

“So is it unfair that the president says the blame is on House Republicans—that they originated it? It’s what he said,” Burr asked Lew.

“Senator, the demand for an enforcement mechanism was not something that the administration was pushing at that moment. Our preferred outcome would have been to have there be something on taxes and something on spending,” Lew said.

“It was unacceptable for the other parties for taxes to be part of it, and the only spending, only alternative that anyone could think of that could be agreed to was sequestration, precisely because it’s so objectionable that nobody could imagine it,” Lew added.

“I heard your testimony today that it shouldn’t take effect,” Burr said. He then quoted President Barack Obama in a speech on Nov. 21, 2011.

“Already some in Congress are trying to undo these automatic spending cuts. My message is simple: No, I’ll veto any effort to get rid of these automatic spending cuts to domestic and defense spending. There will be no easy off-ramps on this one,” the president said at the time.

“What’s changed?” Burr asked Lew.

“The rest of what he said was Congress should work on putting in place policies that make sense to get our fiscal house in order. That is consistent with what he said last night. It’s consistent with what I believe. This is not an impossible problem to solve. It would be better for the country if we have an agreement on a framework for solving our fiscal problems and not going into sequestration,” Lew answered.

“Do you regret suggesting sequestration?” Burr asked Lew.

“Senator, I look back at a time when a lot of people thought we were going to default. That was not an acceptable option, and I think it should not have been the case that the good faith and credit of the United States was at issue, but that was what was at issue, and I think we had a solution that frankly should still work. Sequestration is so objectionable that we ought to just do our work and solve the problem,” Lew replied.