Lew Faces No Blockade to Treasury Approval
Barring an unexpected revelation or major slipup, Jacob J. Lew almost certainly will secure a relatively smooth path to approval as Treasury secretary after a confirmation hearing Wednesday that lawmakers will use as a forum to score political points against Obama administration fiscal policies.
Republican senators have raised questions about Lew, currently the White House chief of staff, on issues ranging from his honesty in representing administration budgets to Congress to his background in finance and his personal investments. But Lew so far hasn’t drawn the sharp criticism from the GOP that has greeted several other of President Barack Obama’s nominees on Capitol Hill.
For Democrats, the confirmation hearing before the Senate Finance Committee offers an opportunity to highlight policies they’ve supported in recent years to boost the economy after the 2008-2009 recession as questions arise about the recovery actions pushed by departing Treasury Secretary Timothy F. Geithner, including the bailouts that sent federal funds to the banking industry.
As outgoing White House chief of staff and former budget director under Obama, Lew played a key role in negotiating budget deals with Congress. In those positions, he made few friends among GOP lawmakers and aides who grew frustrated with his aggressive style and his commitment to protecting social safety net programs.
Sen. Jeff Sessions, an Alabama Republican and the ranking member of the Senate Budget Committee, has said he will oppose Lew’s nomination, but it’s unclear so far how much weight Sessions’ opposition will carry. Sessions charges that Lew misled him and other senators in testimony about the president’s budget and its effect on the national debt.
Sessions has also hit Lew for the administration’s decision not to send Congress a Medicare spending control plan as required by the 2003 Medicare prescription drug benefit law (PL 108-173). Both the Obama and George W. Bush administrations determined Congress could not mandate such a proposal, although the Bush administration did provide the mandated report on Medicare.
Although Sessions is not a member of the Finance panel, GOP senators are likely to take up a similar line of questioning, while accusing Lew and the administration of not doing enough to curb annual budget deficits.
As he prepares to take over as the government’s top financial policy official, Lew’s lack of financial experience is also expected to come under scrutiny. Lew worked at Citigroup from 2006 to 2009, but his was largely an administrative role and he lacks the deep connections to Wall Street enjoyed by recent secretaries such as Geithner and Henry M. Paulson Jr.
At the same time, his stint at the firm, which received a $45 billion bailout from the federal government at the height of the 2008 financial crisis, is likely to come under fire.
“But for the intervention of the government, there would likely be no Citigroup today,” Sen. Orrin G. Hatch of Utah, the top Republican on the Finance panel, said Monday. “If taxpayers are going to prop up failed banks, they have a right to know what a key executive like Mr. Lew did at that time. The American people will want to know what his role was there and how that might have prepared him for this critical job after the most severe financial crisis and prolonged economic downturn in generations.”
Sen. Bernard Sanders, a liberal independent from Vermont, has already announced his opposition to Lew for his financial industry ties. Sanders does not serve on the Finance panel.
GOP senators have also signaled their plans to question an investment Lew held from 2007 to 2010 in a venture capital fund based at a site in the Cayman Islands. Although the investment had been disclosed to the Senate in previous confirmation processes, Sen. Charles E. Grassley, R-Iowa, suggested last week that Lew had not been entirely forthcoming on the matter.
During the 2012 presidential campaign, Obama repeatedly hit GOP nominee Mitt Romney for his offshore investments, and Grassley, a senior member on the committee, has made clear he, too, intends to make political hay of the issue.
Democrats have largely dismissed the GOP criticism and have praised Lew’s nomination. Finance Chairman Max Baucus, D-Mont., said Monday he hopes Lew will be quickly confirmed. Panel member Sen. Charles E. Schumer, D-N.Y., has said he expects Lew to be “a shoo-in for confirmation.”
Still, Democrats are likely to press Lew on their policy preferences as well.
For example, committee Democrat Sherrod Brown of Ohio might urge Lew to reverse years of U.S. policy and formally declare China a manipulator of its currency. Despite ample evidence that China keeps the yuan artificially low, administrations of both parties have long declined to slap sanctions on what is one of the United States’ most important trading partners.
Brown said Tuesday he had discussed the issue with Lew and hadn’t decided whether to bring it up at the hearing. Still, he added, “I have been less than satisfied with the administration’s position on it, and I want Lew to do better.”
Other Democrats may seek commitments from Lew to pursue tough financial regulations as part of the Dodd-Frank law (PL 111-203).
After Sen. Jeff Merkley, D-Ore., who is not on the Finance Committee, met with Lew earlier this month, he issued a statement, saying, “It is clear to me that he is committed to finishing the job on Dodd-Frank financial reform, especially implementing a strong Volcker rule that will put a firewall between hedge-fund style trading and traditional banking.”
Despite the wide latitude historically given to presidents in crafting their teams, Obama has run into considerable opposition to some of his nominees, including former Sen. Chuck Hagel for Defense secretary. Still, despite grumbling about administration policies by some Republicans, Lew is expected to be confirmed relatively easily, barring any major surprises Wednesday.