President Obama is nominating Jacob “Jack” Lew to be his next secretary of the Treasury, pushing to his administration’s forefront a longtime veteran of Washington budget battles.
Mr. Lew knows the federal budget from top to bottom the way few do, even other Beltway insiders. That gives him high value to the Obama administration as it seeks to “win” epic contests, in the next few weeks and years, over the shape of big-ticket entitlement programs, other federal spending, and the US tax code.
He’s widely viewed among Mr. Obama’s fellow Democrats as a safe choice, a known quantity already on the administration’s inside.
If confirmed by the Senate, he would succeed outgoing secretary Timothy Geithner at at time when the nation faces growing pressure from financial markets to bring chronic federal budget deficits under control. Obama views Lew, who has already held prominent posts in the administration, as someone he can trust with this high-stakes job.
“Throughout his career, Jack Lew has proven a successful and effective advocate for middle class families who can build bipartisan consensus,” a senior White House official said in a statement released Thursday morning, ahead of the president’s planned announcement. The official noted that Lew has directed the Office of Management and Budget under both Obama and President Bill Clinton, “negotiating a historic agreement with Congress” in the 1990s and “leading the negotiations of the bipartisan Budget Control Act in 2011.”
Lew has been serving, most recently, as White House chief of staff, a testament to Obama’s confidence in his management skills.
For all the experience he brings and all the praise that’s coming his way, Lew is also relatively untested in some important areas. His readiness to respond to a financial crisis, were it to occur on his watch, is unclear. And the next four years could be marked by important demands for financial leadership on the global stage, not just by maneuvering over domestic policy.
His potential nomination has been hovering in news headlines for weeks, as Mr. Geithner’s expected departure neared. During that time, his name has sparked little controversy, in contrast to concerns that have arisen surrounding Chuck Hagel, Obama’s nominee for secretary of Defense. The military veteran and former US senator has been under fire for everything from positions on Israel and Iran to an alleged antigay streak.
Still, some Senate Republicans may put up forceful opposition to Lew’s nomination.
Sen. Jeff Sessions (R) of Alabama, for one, is firmly opposed to Lew at Treasury, claiming the nominee made “the most direct and important false assertion during my entire time in Washington” when he said Obama’s budget plans would put the nation on course to stabilize the national debt.
Senator Sessions is referring to a 2011 TV interview in which Lew said, “Our budget will get us, over the next several years, to the point where we can look the American people in the eye and say we’re not adding to the debt anymore; we’re spending money that we have each year….”
Financial experts widely agree that a realistic solution to America’s fiscal troubles must include significant spending cuts and reforms to entitlement programs, as well as tax reforms designed to bring both added revenue and economic growth. That’s a tall order under any political climate.
Lew is known as a liberal and a staunch defender of programs that help America’s poor, such asMedicaid. What remains unknown is whether he would also emerge as a successful dealmaker in an environment that has become sharply partisan.
Some Republicans have voiced a lack of confidence in Lew as a negotiating partner, according to news reports during the recent “fiscal cliff” talks. But those comments could also be viewed as a form of praise: He’s considered a shrewd bargainer.
“Jack’s been around for a long time, he’s a tough dude,” says Tom Donohue, who heads the generally conservative US Chamber of Commerce. “I particularly like that he worked in the Congress and worked for the speaker of the House.”
Lew’s days in Congress date back to the earliest part of his career, when he advised Speaker Thomas “Tip” O’Neill (D) Massachusetts at a time of fiscal dealmaking with President Ronald Reagan.
Unlike some Treasury secretaries, Lew is mostly an outsider to the world of Wall Street, but he has held financial posts in the private sector. He was at Citigroup for a few years prior to Obama’s election. Married and with two children, Lew calls New York City his permanent home.
Some advocates for greater regulatory vigilance over the financial sector have voiced concerns about Lew.
“The one area of concern is whether or not he is sufficiently committed to … implementing financial reform and re-regulating Wall Street,” said Dennis Kelleher, president of the nonprofit group Better Markets, in a statement Thursday. “Doing this is vital to protect the American people from Wall Street threatening our financial system again and causing another economic calamity.”
The Treasury secretary chairs the nation’s Financial Stability Oversight Council and will have an important role in implementing financial reforms approved by Congress during Obama’s first term.
Staff writer David Grant in Washington contributed to this report.