US President Barack Obama nominated Jack Lew for Treasury secretary on Thursday, continuing to put a second-term imprint on his Cabinet by choosing yet-another close ally to a key government post.
Lew is a premier federal budget expert who would take the helm of the government’s main agency for economic and fiscal policy just as the administration girds itself for a new confrontation with congressional Republicans over the nation’s debt and deficits.
The president said he feels “bittersweet” about losing Lew as his White House chief of staff, but added that “my loss will be the nation’s gain.”
He noted that Lew was budget director during the Clinton administration, when the budget ran a surplus for three years.
A year ago, almost to the day, Obama appointed Lew as his chief of staff, taking him from his perch as director of the Office of Management and Budget into the White House’s tight inner circle.
In selecting Lew to replace Treasury Secretary Timothy Geithner, Obama not only picks an insider steeped in budget matters but also a tough bargainer. Some Republicans complain that Lew has been unyielding in past fiscal negotiations, particularly the failed talks for a large deficit-reduction deal in the summer of 2011. Some have bristled at what they say is a greater desire by Lew to persuade them rather than negotiate.
If confirmed, Lew would assume the post in time for the administration to tangle anew with Republicans over a confluence of three looming fiscal deadlines — raising the $16.4 trillion federal borrowing limit; averting automatic spending cuts to defense and domestic programs; and the expiration of a congressional resolution that has been keeping the government operating. Those three events, if unresolved, would have a far greater negative effect on the economy than the “fiscal cliff” that Obama and Congress avoided a week ago.
Lew, 57, has often been described as a “pragmatic liberal” who understands what it takes to make a deal, even as he stands by his ideological views.
“He’s a political guy. He didn’t get where he is today by being a shrinking violet,” said Paul Light, a public policy professor at New York University and an acquaintance of Lew’s. “But he’s really a doer. He’s the kind of guy you want at the table if you want to get something done.”
One senior Republican senator, Jeff Sessions, voiced opposition to Lew. But while Lew may face a tough confirmation in the Senate, he’s not likely to encounter the type of stiff opposition that is already mounting against former Sen. Chuck Hagel, a Republican whom Obama has tapped to be his defense secretary.
“We need a secretary of Treasury that the American people, the Congress and the world will know is up to the task of getting America on the path to prosperity, not the path to decline,” said Sessions, the top Republican on the Senate Budget Committee. “Jack Lew is not that man.”
Initial reactions from the business and financial sectors, however, were far more positive.
“One of the realities of Mr. Lew’s appointment is the challenges we face in the country right now — the cliffs we have in front of us,” said Thomas Donohue, the president and chief executive of the US Chamber of Commerce, a business advocacy group. “I think Jack is a very experienced fellow on the issues of debt, deficits and budgets.” He went on to claim that Lew is a “skilled operative,” a “vigorous and strong person,” and a “tough dude.”
Rob Nichols, the president and chief executive of the Financial Services Forum, a major banking industry group, opined: “Given his experience in the government and private sector, Mr. Lew is well suited for the job, especially at a time when Washington must come together to address our debt situation and put our nation on a long-term fiscally sustainable path.”
Lew’s nomination is the fourth major personnel change in the administration since Obama’s reelection. Obama tapped Sen. John Kerry for the State Department, Hagel to lead the Pentagon and White House counterterrorism adviser John Brennan for the top job in the CIA.
One prominent woman in Obama’s Cabinet, Labor Secretary Hilda Solis, resigned her post Wednesday. No successor has been named.
Before becoming Obama’s chief of staff, Lew was director of the Office of Management and Budget, a post he also held back in the Clinton administration, serving from 1998 to early 2001. While running OMB during the Clinton administration, Lew helped negotiate a balanced budget agreement with Congress, something that has eluded Washington ever since.
But while the bulk of his experience is in Washington, Lew also worked on Wall Street as managing director and chief operating officer of Citi Global Wealth Management and then Citi Alternative Investments. At the start of the Obama administration, he oversaw international economic issues at the State Department.
Despite his stint on Wall Street, Lew doesn’t have the type of financial experience that Geithner brought to the job at the height of the financial crisis in 2009. Indeed, there’s not as much of a premium on those skills now as the nation’s attention has turned from bank bailouts to fiscal confrontations and brinkmanship.
Still, Lew will have to address other significant challenges, including completing implementation of the financial regulatory overhaul of 2010.
Lew will probably play a key role in deciding the fate of government-controlled Fannie Mae and Freddie Mac, the federal housing agencies partly blamed for the collapse of the housing market.
Internationally, he will also be the administration’s point man on issues related to China’s integration into the global economy and Europe’s sovereign debt and financial struggles. The issues aren’t foreign to Lew. While a deputy secretary of state early in the Obama administration, Lew managed the State Department’s international economic policy portfolio.