President Obama recently said he would love to hire a top executive into his administration. But for the job of Treasury secretary, he didn’t pick a corporate executive, a famous economist or a former politician — he has decided to tap a trusted adviser, White House Chief of Staff Jacob Lew, an expert on the nation’s ongoing budget wars.
Obama on Thursday plans to nominate Lew to take over from Treasury Secretary Timothy F. Geithner, the president’s longest-serving economic adviser, a White House official said. The selection, to be announced at 1:30 p.m., signals that Obama’s second term will not initially focus on big new ideas to create jobs or expand government investment in the economy.
Rather, it will involve a sustained conflict with congressional Republicans over the nation’s finances. The government is likely to face a deadline to raise the $16.4 trillion federal debt ceiling no later than March 1 — as well as a series of deep and automatic spending cuts known as sequestration set to begin around the same time.
These upcoming battleswill once again pit Democrats’ economic vision against that of Republicans. Democrats say they want to raise taxes on the wealthy to shrink the deficit but reduce government spending sparingly so as to preserve funding for domestic priorities such as education. Republicans oppose new taxes, saying they would crimp economic growth, and favor deep cuts to spending.
Lew, 57, is a veteran of these fights. He was formerly the budget director for Obama and President Bill Clinton. He has been negotiating compromises over taxes and spending since the 1980s, when he was a top aide to then-House Speaker Thomas P. “Tip” O’Neill Jr. (D-Mass.).
“Jack Lew is a great budget man taking over Treasury at exactly the moment that budget and tax issues have become the dominant economic issue in Washington,” said Austan Goolsbee, a former chairman of Obama’s Council of Economic Advisers.
Some Democrats say that although Lew may be the best choice at the moment, the White House must address unemployment and keep pushing for measures to create jobs.
“Jack Lew is the guy you’d want there for upcoming fiscal deals, but it’s also very important to have folks on the team who will push the Keynesian, or jobs, imperative from the inside, even if that means a temporarily larger budget deficit,” said Jared Bernstein, a former White House economic adviser.
“Though they’ve been winning the arguments, the White House has been too stuck on the Republicans’ side of the field, basically arguing deficits and austerity measures,” he said. “They need to shake that up somehow.”
Lew’s nomination will allow Geithner, who has been seeking to leave Treasury since 2011, to finally step down. In 2011, Obama pleaded with him to keep his post, given the European financial crisis and continual fiscal battles, and he agreed to stay through the end of this month. Geithner, who came in amid a financial crisis and deep recession, leaves Lew an economy experiencing a steady, but not robust, recovery.
Deputy Treasury Secretary Neal Wolin, who had been planning to leave around the same time as Geithner, will stay on at the White House’s request to help with the transition.
Ideologically, Lew is a deficit hawk, and he thinks Obama should be pursuing an aggressive effort to slow the growth of the federal debt. But he has deep roots in Democratic politics, and in previous negotiations he has passionately resisted efforts to slice the social safety net, particularly Medicaid, the health insurance program for the poor.
The nomination is subject to confirmation by the Senate, where many Republicans say they found Lew to be uncompromising during negotiations over the budget in 2011. House Speaker John A. Boehner (R-Ohio) has complained bitterly about him, while a GOP congressional aide said Wednesday that Lew “is more interested in convincing Republicans of the wisdom of his position than seeking common ground.”
But despite the criticism, there was no groundswell of opposition to him Wednesday, and there did not appear to be any significant barriers to a relatively seamless confirmation.
Lew’s supporters note that he has been successfully forging bipartisan budget deals for decades — including, in the 1990s, when he helped craft an agreement that led to surpluses for three years.
“Jack Lew’s record has and continues to be stellar,” White House press secretary Jay Carney said on Wednesday. “He is that rare person in Washington who has been here for years, who has done some very hard things and brokered some serious bipartisan agreements and done it in a way that has earned the admiration of those he has worked with.”
Although Lew’s immediate tasks would be fiscal, he also would have to confront a broader range of challenges, some outside his area of expertise.