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OMB Nominee Rivlin Has Has Credibility, Honest Reputation

By Steven Mufson
The Washington Post

WASHINGTON

When then-Rep. Jim Wright, D-Texas, wanted to pass a spending measure and claim it would boost the economy enough to pay for itself in about a year, Alice Rivlin would not let him do it.

And when Republican lawmakers under President Ronald Reagan wanted to say that tax cuts would pay for themselves by boosting the economy, Alice Rivlin would not let them do it.

As the first director of the Congressional Budget Office from 1975 to 1983, Rivlin attempted to create an agency in her own image: low key, but tough-minded and unwilling to bend her economic judgment to the prevailing political winds. Though she was not well-loved by many lawmakers, she earned widespread respect for her honesty as the nonpartisan chief economist of Congress.

Wednesday she goes before the Senate Governmental Affairs Committee to win approval to serve as President-elect Bill Clinton's deputy director of the Office of Management and Budget. At a time when Clinton's budget proposals are under attack and reconsideration, Rivlin will lend the president-elect a voice of authority.

"She brings an enormous amount of credibility," said Robert D. Reischauer, the current CBO director who has sparred on and off over budget figures issued by President Bush's OMB. "She is someone who's called the shots straight."

Rivlin, 61, has a tough approach to budget numbers and a steely determination to resist political pressure to deny budget realities.

The biggest and ugliest budget reality staring at her and the rest of the Clinton administration is the large federal government deficit. "The budget deficit has paralyzed policy for more than a decade," Rivlin says in her recent book, "Reviving the American Dream."

"She feels really strongly that the deficit is a problem that needs to be dealt with over the next four to eight years," says Raymond C. Scheppach, her former deputy at CBO, who is now executive director of the National Governors Association.

Over the years, Rivlin has backed tough measures -- including an increase in the federal gasoline tax, a value added tax and a redistribution of federal responsibilities to state governments -- in order to cut the federal deficit.

Most of those measures have been opposed by Clinton, but recent increases in deficit projections have forced Clinton to take a closer look them.

She has, she has written, a "bias ... against magic wands and painless solutions. Everyone looks for ways of accomplishing ambitious goals without effort -- lose weight without dieting, learn French while you sleep." For years, she says, the government has practiced the equivalent in tax and spending policies in pursuing "supply-side economics."

Supply-side economics, a theory promoted by a handful of economists and journalists, said that lower tax rates would encourage people to invest more and work harder and would provide such a big economic stimulus that tax revenues actually would grow.

The theory was embraced by President Ronald Reagan as a reason for backing deep tax cuts in 1981, though most mainstream economists say the supply side effect of tax cuts was grossly exaggerated. It was, in Harvard University economist Benjamin M. Friedman's words, "a fairy tale."

"It sounded too good to be true, and it was," she says.

Though a longtime Democrat, Rivlin's recent suggestions on reorganizing government sound somewhat similar to the "new federalism" that conservatives espoused in the early 1980s.

Her recent book suggests a national value added tax, similar to a sales tax, that would provide funding for state governments to carry out more programs. The federal government, which she compares to a conglomerate that no longer can manage all its subsidiaries effectively, mostly would eliminate its programs in education, housing, highways, social services and job training.

Rivlin also possesses background in key spending areas -- health, Social Security and welfare -- that Clinton might want to reform to avoid tax increases and deliver services more effectively.

Rivlin, born in Philadelphia in 1931, graduated from Bryn Mawr College and then earned a PhD in economics from Harvard University. Afterward, she joined the Brookings Institution and wrote about federal financing of higher education.

In the 1960s, she worked for the Department of Health, Education and Welfare from 1966 through 1969 finishing as assistant secretary for policy and evaluation. Afterward, she returned to Brookings.

In the early 1970s, President Richard M. Nixon began impounding funds appropriated by the Congress. In the wake of a heated dispute over the separation of powers, Congress overhauled the budget process.

In addition to creating a more formal budget schedule and budget committees in the House and Senate, the legislation created the CBO.

"Not a lot of people thought long and hard about what it should be and it could have developed in many different forms," said Reischauer. "The form it has taken is in large measure her vision."

Rivlin was particularly well-suited to carry out that vision.

In her recent book, "Reviving the American Dream," Rivlin wrote, "I am a fanatical, card-carrying middle-of-the-roader." Her views, she said, "cannot easily be classified as either liberal or conservative" and "reflect both a strong belief in the efficacy of private markets and a conviction that public action is often necessary and constructive."