StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

Jack Lew Is A Great Choice For Treasury Secretary

10 Jan 2013
Posted by Stan Collender

Anyone who was surprised by yesterday's announcement that the president had nominated White House Chief of Staff Jack Lew to succeed Tim Geithner as Treasury secretary either hasn't been reading the tea leaves correctly or were too distracted by the fiscal cliff to notice that the stars were all aligned for this to happen.

The fact that Lew, who had taken the lead in many previous budget negotiations, was all-but-invisible during the recent fiscal cliff discussions was a sure sign that the White House wanted to protect him from any criticism over the results that might come back to bite during confirmation hearings. Lew was involved, but he wasn't out front.

The tea leaves have also pointed to Lew for some time because:

1. The usual background for a Treasury secretary -- deep Wall Street experience -- wasn't available to the White House this time because financial executives are still considered politically toxic inside the beltway.

2. The biggest fights for the next Treasury secretary will be over taxes, Medicare, Medicaid and Social Security. Lew knows more about those topics than anyone else in the administration.

3. With big confirmation fights on the horizon over the White House's nominees for Defense and CIA, the administration needed to nominate someone who would likely get confirmed relatively easily. Lew has already been confirmed twice in this administration when he was nominated for deputy secretary of State for management and resources and OMB director, and twice in the Clinton administration when he was selected for OMB's deputy director and then director. That means that he's already done the paperwork numerous times and has been investigated thoroughly.

That's not to say the GOP won't make Lew's confirmation hearings into a spectacle; after all, it's not every day you get to interrogate the president's chief of staff. But in spite of the entirely predictable Senate GOP grumbling about Lew, he's very likely to be confirmed easily. I expect him to get 80-85 votes.

4. Treasury secretary is one of the two cabinet positions -- attorney general is the other -- that every White House wants someone it can trust. Jack has repeatedly proven himself to be totally loyal to the president and, along with his tax and mandatory program expertise, that alone made him a likely candidate.

5. The White House needs a Treasury secretary that will follow its lead. Most of the other names that were mentioned -- former FDIC chairwoman Erskine Bowles and Sheila Bair and Erskine Bowles, for example -- would have been far too independent.


All good points, but one

All good points, but one question:
"former FDIC chairwoman Erskine Bowles"?

Does being a Citigroup

Does being a Citigroup executive not count as Wall Street experience anymore?

"The White House needs a

"The White House needs a Treasury secretary that will follow its lead."

I guess that might be an improvement over what we have now--a White House that follows Treasury's lead.

Lew's One Fatal Flaw

Lew may very well be the most qualified candidate for the treasury based on his expertise in fiscal policy, yet he would be an impediment to bipartisan deficit reduction. House Republicans, specifically Boehner and his staff, hate Lew and refused to negotiate with him in the 2011 debt ceiling talks. Instead of being someone who can work with Republicans to find common ground, as Biden has done, Lew will likely maintain the status quo of punting major decisions down the road in the absence of a significant bipartisan deal. Lew would be best served to recall his days working in Tip O'Neill's office on the 1983 Social Security reform. Reagan and O'Neill had mutual respect for each other, something that escapes Obama's administration and Boehner's staff. In the age of government gridlock, it takes more than policy expertise to be treasury secretary for a position involved in major budget negotiations; it requires sincere negotiating and respect for and from your counterparts, neither of which Lew has exhibited in his time in the Obama administration.

What is to be gained from

What is to be gained from appeasing and enabling a dysfunctional Republican caucus, one which lacks the ability--and far less the desire--to conduct good faith negotiations on any subject?

Going back even to the days of Newt Gingrich, the House Republican M.O. has been the same: any bipartisan gesture should be interpreted as sign of weakness, and a cue to move the goalposts even farther apart.

Until House Republicans have absorbed enough damage to re-learn the necessity of good faith and compromise, it is pointless for the White House to engage them from any other standpoint than as an adversary.

the question is not what is

the question is not what is to be gained but what will be lost. if lew continues his off-putting negotiating style, the odds of government default AND shutdown increase. I'm not arguing that Congressional Republicans shouldn't be blamed for our inability to have serious fiscal reform; instead i'm arguing that lew does not help overcome an obstinate counterpart (Republicans). BOTH the obama administration and congressional republicans have contributed to our perpetual 11th hour deals that don't accomplish anything other that delaying a crisis

With serious people talking

With serious people talking seriously about solutions like $1T platinum coins, I think any possibility of respect for the Republican position has already evaporated.

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