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May 09, 2011, 08.56 AM IST | Source: Reuters

Alice Rivlin, Washington's budget guru

If Washington manages to strike a deal to fix the country's finances over the long term, a veteran of previous budget battles named Alice Rivlin will probably have something to do with it.

Alice Rivlin, Washington's budget guru

If Washington manages to strike a deal to fix the country's finances over the long term, a veteran of previous budget battles named Alice Rivlin will probably have something to do with it.

As lawmakers struggle to come up with a plan to tame the ballooning US debt, many of them are inviting the diminutive economist to Capitol Hill to hear her thoughts.

Or they are paging through one of the three separate deficit-reduction plans that she helped craft last year.

They will almost certainly encounter something that will make them swallow hard.

In order to stabilize the country's debt at a level that will not spook investors, Rivlin says, Congress will have to cut entitlement spending and increase tax revenue -- a position that unsettles both liberals and conservatives.

The specifics are even more unpleasant. Rivlin has backed a national sales tax, an increased retirement age, a partial privatization of government healthcare, and a gas-tax increase, among other steps that are likely to anger voters.

"I don't think she worries excessively if people say that something is beyond the realm of the politically possible," said White House budget director Jack Lew.

Rivlin, 80, said she is cautiously optimistic that Congress is up to the task.

"Trashing our political system has become a parlor game that everybody likes to play, but I think our system actually works pretty well a lot of the time," she said in an interview in her modest office at the Brookings Institution think tank in Washington.

"We've solved a lot of our problems and I think we'll solve this one."

Rivlin's expertise, forged over decades of budget battles, ensures that her views carry weight on both sides of the aisle.

"She is the best because she knows as much or more than anybody about any subject," said former Republican Senator Pete Domenici, who clashed with Rivlin during the 1990s but more recently co-chaired a deficit-reduction task force with her.

A centrist Democrat, Rivlin said she is more comfortable in nonpartisan roles.

"I think I'm just not a natural advocate, particularly on these issues where I see the need for bipartisan cooperation," she said.

As Washington's focus has turned from job creation to deficit reduction, few have been as active as Rivlin.

She has participated in three separate task forces, each of which issued detailed plans at the end of last year.

She has spoken to audiences around the country and appeared regularly on television to focus attention on the problem.

And as Congress girds for a fierce debate over raising the USD 14.3 trillion US debt limit, Rivlin is meeting with key lawmakers to lay out possible solutions.

"Nobody knows her brief better than Alice," said Democratic Senator Kent Conrad, who is involved in several deficit-reduction efforts. "She's the wise senior counselor."

Keys to the car

Rivlin did not always command such respect on Capitol Hill.

In the 1970s, she set up the Congressional Budget Office as a nonpartisan scorekeeper that would tell Congress the cost of legislation. Many lawmakers saw the fledgling agency as a threat to their authority.

When Rivlin requested a vehicle to ferry documents and staffers around Capitol Hill, some accused her of extravagance. It became front-page news.

"In those days that was sort of a symbolic thing -- a lot of emotion about who had cars," Rivlin said. "It was a funny episode because it did illustrate that there was a lot of anxiety about this new organization."

CBO did not get a vehicle of its own, but it was on firm footing by the time Rivlin left in 1983.

"CBO wouldn't be what it is today, which is a well-respected, nonpartisan organization, if it hadn't been for the way she had set up the organization," said William Hoagland, who worked with Rivlin at CBO before becoming a top Republican budget aide in the Senate.

During the 1990s, Rivlin took on a different role. As President Bill Clinton's budget chief, she battled the Republican-controlled Congress over spending and tax issues -- at one point flipping a coin to determine which side would speak first during a particularly tense meeting.

When the dispute forced the government to shut down, Rivlin signed the order that furloughed 800,000 federal workers and closed everything from passport offices to national parks.

Those who worked with Rivlin at the time say she tried to minimize the adversarial nature of the job.

"She wanted to try to gain consensus. A lot of people were used to the more dictatorial styles of other budget directors," said Barry Anderson, who has held budget-related jobs in the US government and international organizations.

After that, Rivlin served as the No 2 official in the Federal Reserve under Alan Greenspan and helped the District of Columbia emerge from bankruptcy.

Now she is back in the fray. With control of Congress divided between the two parties, Rivlin sees a greater chance to forge a lasting deal than if one party controlled all the levers of power. The looming debate on the debt ceiling could also force Congress to act, she said, rather than postpone action until after the 2012 election.

"We can't delay much longer, and I think that's sinking in," she said.

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