UPDATE 4-Obama names ex-Clinton budget veteran to head OMB

* Lew a “hall of fame” expert for ending deficit – Obama

* Lew seen in same mold as deficit-hawk Orszag
(Upates with White House timing of Lew confirmation hearings)

By Alister Bull

WASHINGTON, July 13 (BestGrowthStock) – President Barack Obama on
Tuesday picked Jack Lew as the new White House budget chief,
naming a policy veteran who helped return the United States to
budget surpluses and who must now confront its record deficit.

Obama said Lew, who served President Bill Clinton as budget
head, was the right man to cut the deficit over the next few
years and to “put our nation back on a fiscally responsible
path”, touching an issue that polls show is a key voter worry.

Analysts said this would require a mixture of tax hikes and
spending cuts, which are both politically unpopular issues to
even discuss in an election year, and warned it would take
considerable time to close the country’s funding gap.

“If there was a hall of fame for budget directors, 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,” Obama said.

“Jack is the only budget director in history to preside
over a budget surplus for three consecutive years,” Obama said
at the White House, recalling a period when investors rewarded
White House’s fiscal discipline with lower bond yields.

Clinton inherited a deficit and eight years later left
office with a $237 billion surplus.

Lew was director of the Office of Management and Budget
between 1998 and 2001 and is currently Deputy Secretary of
State for Management and Resources.

By tapping him, Obama is seeking to draw credibility from
Clinton’s budget accomplishment to reassure investors rattled
by a recent sovereign debt crisis in Europe.

But analysts noted the economy that Obama inherited was far
more fragile following the worst recession in a generation
than during the Clinton era.

Lew’s appointment requires Senate confirmation. White House
spokesman Robert Gibbs said the nomination was unlikely to be
sent to Capitol Hill before the August vacation recess, and the
OMB would be run by an acting director in the meantime.

Lew’s nomination quickly drew support from lawmakers,
including Paul Ryan, top Republican on the House of
Representatives Budget Committee.

“Jack has consistently demonstrated a pragmatic approach to
tackling challenges and getting things done. The grave threat
posed by our looming fiscal crisis will require leaders to
chart a new course,” Ryan said in a statement.

Obama says he is committed to curbing a record U.S. deficit
and rising national debt in the medium term, but wants to
maintain taxpayer supported fiscal stimulus policies to aid
growth and jobs until hiring has picked back up.

Lew, a former hedge fund manager, would replace Peter
Orszag, who steps down on July 30 for a position at the Council
on Foreign Relations, a New York think-tank.

Orszag was seen as a budget hawk within the Obama
administration, which has debated how far to go in emphasizing
continued stimulus over deficit reduction.

ELECTION YEAR

Democrats running in the November midterm congressional
elections are also keen to emphasize fiscal probity to voters
weary of government bailouts, with the deficit forecast to rise
to $1.56 trillion this fiscal year.

Lew’s success in ending the deficit under Clinton mark him
as a deficit hawk, said analysts, who did not believe he would
have accepted the post if he was uncomfortable with the White
House’s budget priorities.

“I think Jack is an absolutely terrific public servant,”
said James Horney, director of federal fiscal policy at the
Center on Budget and Policy Priorities in Washington.

“It’s hard for me to imagine a better person given the
challenges that lie ahead,” said Horney. “There are no easy
politically popular ways to do it. I am absolutely convinced it
is going to take a combination of increases in revenues … and
also reductions in spending,” he said.

Obama has appointed a bipartisan commission to study ways
of tackling the deficit. It is due to submit recommendations by
the end of 2010, and is expected to suggest a mixture of
spending cuts and higher taxes.

Brian Riedl of the conservative Heritage Foundation said
Lew knew the budget would have a shorter learning curve than
previous budget chiefs having done the job before.

But repeating his Clinton-era performance of rolling back
the deficit was “virtually impossible”.

“The 1990s budget surpluses were based on some very good
luck,” said Riedl, citing lower defense spending after the end
of the Cold War and high tax revenues generated by strong
economic growth and a dot.com-driven stock market surge.

“Those variables are responsible for virtually 100 percent
of the deficit reduction in the 1990s … I wouldn’t count on
history repeating itself on that. He’s going to have a tough
haul,” said Riedl.

(Additional reporting by Patricia Zengerle and Caren Bohan;
Editing by Paul Simao and Alan Elsner)

UPDATE 4-Obama names ex-Clinton budget veteran to head OMB