OMB nominee vows exhaustive review of agencies

President Obama's nominee to lead the Office of Management and Budget told a Senate committee on Thursday that one of his first objectives as OMB director would be to conduct an exhaustive review of every federal agency to trim waste and inefficiencies.

Jacob "Jack" Lew, who ran OMB during the Clinton administration from 1998 to 2001, conducted a similar governmentwide analysis during his first tenure at the agency. The Senate Budget Committee and the Homeland Security and Governmental Affairs Committee held confirmation hearings on Thursday for Lew.

Lew, who is widely known and respected on Capitol Hill, told the Homeland Security and Governmental Affairs panel about his plans for a thorough review of the agencies if confirmed. Both committees must refer Lew's nomination to the full Senate for a vote, which lawmakers indicated could occur as early as next week.

Senators from both parties credited Lew, who most recently served as deputy secretary for management and resources and chief operating officer at the State Department, for his intellect, management acumen, and ability to work across the political aisle.

"He is the ideal person to lead this agency," said Budget Committee Chairman Kent Conrad, D-N.D., in his opening statement. The committee's ranking member, Judd Gregg, R-N.H., agreed, noting that Lew is "willing to make the tough calls at OMB."

Nominated for the post in July, Lew would replace Peter R. Orszag, who left the job in August. Deputy Director of Management Jeffrey Zients has served as interim director since Orszag's departure.

Lew's opening statements before the committees promised consensus building across the partisan and ideological divide. But he offered little specificity to the policy direction he would take.

"The American people -- rightfully -- expect their government to spend their tax dollars wisely and to avoid waste," Lew told the Homeland Security and Governmental Affairs Committee. "They also have a right to expect their government to deliver services with the ease and convenience found in virtually every other part 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."

Lew credited the Obama administration for its management of the economy but noted that the "coming months may be the most critical time in fiscal policy in recent memory" and that tough choices would be needed to put the country on a sustainable path.

"And while we should aspire not to waste taxpayer dollars regardless of whether the budget is in surplus or deficit, the management of the federal government is particularly important during lean times," he told the Budget Committee.

While not particularly partisan -- questions about Lew's tenure at Citibank never materialized -- the morning confirmation hearing often meandered to local concerns of homestate senators, from infrastructure in Alaska to water quality in North Dakota. The nearly two-hour hearing, however, was dominated by discussion of the debt and the federal deficit.

As budget director in the 1990s, Lew left the incoming Bush administration with a $237 billion surplus. The deficit for fiscal year 2009 was $1.42 trillion. While arguing that "we are in an unsustainable fiscal situation right now," Lew said it is not realistic to eliminate the deficit completely overnight. He supported the administration's goal of getting the deficit to 3 percent of GDP and then chipping away at that figure.

Republican senators, however, want Lew to be even more aggressive. "Our goal should be balancing the budget, not a three percent deficit," said Sen. Jeff Sessions, R-Ala.

The afternoon hearing, meanwhile, focused more on government management concerns, including reforming the Postal Service, federal contracting regulations and performance management, which Lew said is "still coming of age" nearly 20 years after the 1993 Government Performance and Results Act. He noted that agencies need to return to honestly assessing program performance without fear of losing funding.

The nominee also noted that the federal acquisition workforce is "woefully understaffed," a challenge that has led to reduced competition and an increased reliance on large contractors for support. The White House's proposed fiscal 2011 budget includes $158 million to beef up the procurement staff of federal agencies by 5 percent.

Lew also pledged to learn more about the High Road contracting policy, a proposal the administration is reportedly considering that would allow agencies to favor labor-friendly firms when evaluating bid proposals. Sen. Susan Collins, R-Maine, told Lew that the policy would hurt small businesses and move the procurement system away from its merit-based approach.