Treasury Is Lightning Rod for China, Banks and Debt
Whomever President Barack Obama taps to replace Treasury Secretary Timothy F. Geithner is likely to face tough questioning from senators in both parties on the $16 trillion debt, Chinese currency issues and bank regulations, to name just a few topics.
But the good news for Obama is that the man rumored to be his top pick — current White House Chief of Staff Jacob J. Lew — is likely to be easily confirmed, regardless.
Still, the high-profile job will come amid a backdrop of success or failure in averting the fiscal cliff, a raging dispute over the future of the debt ceiling and sharply divided views between the parties and even within the parties about how to regulate Wall Street and the biggest banks.
Lew’s résumé is among the most bulletproof in town — he’s been a budget director for multiple presidents and an aide to former Speaker Tip O’Neill and has been confirmed before by the Senate. His past experience at Citigroup would be both a plus and a minus — showing he has Wall Street experience while also bringing up questions about the bailed-out bank and his role there.
“I think they’ll beat him up in the hearings, and he’ll sail through on the floor,” a Senate Democratic leadership aide predicted.
Several Republican senators told CQ Roll Call they don’t expect a big fight — barring some unexpected disclosure.
“That would be a logical choice for the president to make,” Sen. Dan Coats, R-Ind, said. “He brings credentials and experience with him that would be valuable, but in the end this really is the president’s choice.”
Still, he noted, “there’s always an X factor that may occur … but Jack’s been through the process.”
Sen. Roy Blunt, R-Mo., predicted an easier time more broadly, suggesting Lew would be a good pick. “My view is the president has greater capacity to get second term appointments,” he said.
However, he joked of a treasury nominee, “I want to hear that they disagree with the president on the fundamentals of the economy. That’s not likely to happen.”
Sen. Susan Collins, R-Maine, said she doesn’t know Lew well enough to have a position on confirmation. “From what little I do know, he is well-regarded,” she said.
That’s not to say that someone like Lew wouldn’t have to face questions.
“What are we going to do about our $16 trillion debt?” Collins said would be the first on her list.
Sen. Charles E. Grassley, R-Iowa, wouldn’t comment on a Lew nomination in particular, but said he’ll press the next nominee on providing greater openness to Congressional oversight.
“I’d like to see them answer their letters fully the first time,” he said. He noted he’s already holding up confirmation of an assistant Treasury secretary over letters he’s sought from Geithner regarding the scandal over alleged manipulation of the LIBOR, or London Interbank Offered Rate.
The ongoing negotiations over dealing with the nation’s finances also would get a full airing, given that no one expects all issues to be resolved before inauguration day — when Geithner, who is leading the fiscal cliff talks with guidance from Lew, hopes to exit the administration.
Sen. Jeff Sessions, the ranking member of the Budget Committee, has clashed with Lew previously in hearings over the president’s budgets and has taken issue with statements made by the administration that the president’s budget would begin to pay down the debt — even though it never has a single year without a large deficit.
“That really worried me,” Sessions said. “How can we negotiate with someone who says it’s dark outside when the sun is shining? … We need people at the Treasury secretary [level] willing to look the American people in the eye and tell them the truth.”
The White House has previously pointed to its budgets reaching balance when interest payments are excluded, as well as reducing debt as a percentage of the economy. But the nominal debt would still grow every year by hundreds of billions of dollars. And Republicans have repeatedly noted that the administration has never offered a plan that would deal with the longer-term entitlement problems that threaten to overwhelm the budget in coming decades.
Sessions and several Senate Democrats also have criticized Geithner for declining to label China a currency manipulator, something the Alabama Republican said would come up regardless of who is nominated to replace him.
“We need to have it right on the table,” Sessions said.
Republicans also aren’t happy with Geithner’s pushing a plan to eliminate the debt ceiling as a practical matter and are sure to press the next nominee on the matter.
Top Democrats also predicted Lew would be easily confirmed.
“I can’t imagine that he’d have any trouble,” said Sen. Patty Murray, D-Wash., the incoming chairwoman of the Budget Committee. “I have tremendous respect for him.”
Other Democrats have been disappointed with Geithner and are hoping for a more liberal, more activist regulator of Wall Street to replace him. Lew can expect some questions on that front as well.
Sen. Thomas R. Carper, D-Del., had been urging former Clinton Chief of Staff Erskine Bowles to allow himself to be considered for the job, contending that Bowles has shown he can bring the two parties together. But so far, Bowles has said publicly and privately that he’s not interested, and Lew has repeatedly been reported to be in the mix.
“Either would be a very good pick,” Carper said, adding that he hopes the GOP doesn’t use the hearings to score political points.
“I hope it won’t turn into a circus, even on a small scale,” he said.