WASHINGTON—President Barack Obama’s chief of staff, Jacob Lew, is likely to be the new secretary of Treasury according to unofficial comments by White House insiders.
The president is expected to announce Lew as Timothy Geithner’s replacement Thursday, according to reports by Washington-based Politico. Geithner has already indicated that he would like to move on after four tough years in the eye of the financial crisis.
Jacob (Jack) Lew comes with a wealth of experience in budget management and congressional negotiations. He has served twice as director of the Office of Management and Budget (OMB), once in the Obama administration and earlier under Bill Clinton. He also knows his way around Congress having been a part of negotiations on taxes and spending when he was aide to the Speaker of the House Thomas P. “Tip” O'Neill Jr. (D-Mass.)
Dr. John Hudak, governance fellow at the Brookings Institution, says Lew would not only bring D.C. insider background to the Treasury, he would also bring a sound knowledge of the numbers and politics surrounding significant issues.
“He understands how to make deals, handle egos on Capitol Hill, and in the White House, and function with polarized parties,” Hudak said in an email.
Close to Obama
As OMB director and chief of staff, Lew also has a grasp of, “the reach and power of the presidency and the executive branch, as well as its limits,” Hudak said.
Born and raised in New York City, Lew is a lawyer, a graduate of Harvard University and D.C.’s Georgetown University Law Center. He is a close confidant of President Obama, which is seen as an advantage by some and a disadvantage by others.
“I am not sure why you are discounting the fact that Jack Lew can call up President Obama and get him to pay attention to stuff that he cares about,” economist Jared Bernstein told Larry Kudlow and James Pethokoukis, on CNBC’s “Kudlow Report,” when the latter two scoffed at the impending appointment.
Bernstein, a former economic adviser to Vice President Joe Biden, conceded he had reservations about Lew’s experience in international financial markets and banking regulations. These areas were a strength of outgoing Timothy Geithner, who was a former president of the Federal Reserve Bank of New York.
Bernstein defended the appointment, however, saying that in the present fiscal climate of budgetary restraint and tough congressional negotiations, Lew would serve Obama well. He noted that Lew, a Democrat, was more conservative than many in the Democratic political spectrum.
“You need someone who understands the fiscal books at a time like this,” Bernstein said of Lew.
Pethokoukis, a political commentator with conservative think tank American Enterprise Institute, was not so confident. “We need someone who understands where we should go and where those books should take us, and I don’t think he does,” he said.
Lew’s closeness to Obama is also seen as a threat to his impartiality as Treasury secretary. “Mr. Lew needs to demonstrate to Congress that he is not simply a puppet of the White House, but someone willing to engage all of the interested stakeholders and political actors,” Hudak said.
It is a criticism Republicans are preparing to make, many holding Lew, as director of the OMB, responsible for Obama’s earlier budgets and an increase in the debt ceiling.
Sen. Jeff Sessions, (R-Ala.), ranking member of the Senate Budget Committee, leaked a statement to Fox News saying he will oppose Lew as Treasury secretary on account of Lew’s previous role in budget decisions.
Sessions conceded that Lew had been approved by the Senate in the past but said this time it is different “At this time of unprecedented slow growth, high unemployment, and huge deficits, 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. Jack Lew is not that man,” he said in the statement according to Fox.
New Chief of Staff
Who will replace Lew as Obama’s chief of staff remains the subject of conjecture at this point.
Obama’s Cabinet has been one of the most stable on record, but the role of chief of staff has been problematic, moving from current Chicago Mayor Rahm Emanuel, to acting chief of staff, Pete Rouse for three months, then William Daley in 2011, and finally to Lew in 2012.
There have also been significant upheavals leading into Obama’s second term with changes in leadership in defense, Department of State, the CIA and others predicted to follow. Additionally, the president announced Wednesday that Labor Secretary Hilda Solis, would not be returning for a second term.
For these reasons, John Hudak believes Obama will be looking for stability in his new chief of staff.
National Security Adviser Thomas Donilon or his Deputy Denis McDonough, both with “extensive administrative experience” are likely candidates according to Hudak, although others have suggested, Ron Klain, a former chief of staff to Vice President Biden, as another possibility.
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