Pershing INSITE: Jack Lew’s Warning: “Don’t Blow a Hole in the Deficit”

While generally upbeat about global economic prospects, former Treasury Secretary Jack Lew warned policymakers against “blowing a hole in the deficit” by cutting taxes and pursuing aggressive fiscal policy measures.

Jack Lew

Lew delivered the opening keynote address at the Pershing INSITE conference on June 14 in San Diego. He was secretary of the Treasury from 2013 to 2017 under President Obama. He previously served as White House chief of staff in the Obama administration.

He spoke on the day Representative Steve Scalise and four others were shot in Washington and commended the bipartisan sympathies that had been expressed in Congress.

“The economy is ‘steady as you go’ in the U.S. and throughout the world,” Lew said, adding that growth is stronger in Europe than many people realize and the anxiety about China’s economic path has subsided.

Yet, he said, it is hard to reconcile the deep anxiety and anger expressed by many Americans with the positive economic conditions. It has to do with technology and globalization and the connection between the two, according to Lew.

Factories throughout the world are highly automated, he said, not because of lower labor costs but because of technology. “Technology is making the structure of manufacturing different,” Lew said.

Technology makes things more affordable but is threatening workers’ careers and those of their children, according to Lew.

Some things can help, like investment in infrastructure, which would “resurrect” blue-collar jobs, and the “retraining” of workers. But Lew worries that the merger of technology and globalization makes it too easy to blame America’s problems on “others.”

He said the U.S. should invest “fairly heavily” in infrastructure and “turn the corner” of education.

But, he said, we don’t need a tax cut.

“We don’t need to add fiscal stress in a world where the Fed is raising rates,” he said, which it had done before he spoke.