Bloomberg’s Hans Nichols broke the news on Wednesday that President Obama will nominate Jack Lew to be the next Secretary of the Treasury. Washington insiders greeted the news with knowing nods—this move was widely expected. Washington outsiders will more likely react by wondering, “Jack Who?”
Lew is currently White House chief of staff, just the latest in a long line of top-level government jobs he’s held. He has twice served as Director of the Office of Management and Budget (once under Bill Clinton, again under Obama) and also as Deputy Secretary of State. When he arrives at Treasury, Lew will join an elect group of Washington big shots who have held multiple cabinet positions: Leon Panetta, Caspar Weinberger, George Shultz, James Baker. Unlike those larger-than-life figures, Lew’s profile outside of Washington (and on Wall Street) is virtually nonexistent. He’s soft-spoken, doesn’t ache to be on television all the time, and is expert at such non-glamorous things as management and budget matters; he’s played a role in every big budget deal since 1983. He’s a wonk Zelig.
Lew’s nomination is important in several respects. First, it’s in keeping with Obama’s inclination to promote from within those he trusts and feels comfortable around. Obama’s other option for Treasury secretary was to bring in a prominent outsider, probably from Wall Street, who would have more immediate credibility in financial circles, both domestically and abroad. Lew lacks this sort of stature.
Second, putting Lew at Treasury suggests that Obama intends to drive a hard bargain with Republicans on tax, spending, and entitlement issues, and that he isn’t particularly concerned with how they feel about his choice. Early in the administration, most Republicans viewed Lew favorably because of his long experience on Capitol Hill. But after two years of negotiating with him, many changed their minds. In his book, The Price of Politics, Bob Woodward reports that Republicans found Lew “disrespectful and dismissive.” He was “always trying to protect the sacred cows of the left,” John Boehner’s then-chief of staff complained.
These complaints stemmed from Lew’s deep knowledge of the budget and his insistence on explaining in detail the impact of the cuts Republicans were proposing. “There’s not a condescending bone in Jack’s body,” says Kenneth Baer, a former senior adviser to Lew and associate director of OMB. “This is a monumental case of sour grapes. Those on the other side of the negotiating table from Jack recently probably felt that he was standing up for the president’s agenda and knows his stuff. He’d go through what details mean—why they matter—and I don’t think the folks on the other side of the table were prepared for that. Either they didn’t care about the effects or didn’t want to know about them.”
Third, Lew’s nomination indicates that Obama is mindful that his second term will largely be about implementing his first-term achievements, many of which will involve the Treasury, such as changes in the tax code and implementing the Dodd-Frank financial reforms. Lew is also equipped to replace Tim Geithner as a point man in ongoing budget and entitlement-reform negotiations with the GOP in a way that a prominent outsider would not be.
Can Lew get confirmed before the next budgetary crisis arrives? An article in Politico suggests his nomination may run into trouble: “Lew has irked powerful Republicans like Senate Minority Leader Mitch McConnell during tense negotiations to raise the debt ceiling as well as the final round of talks to avert the fiscal cliff at the end of 2012,” Politico said.
I don’t buy it. In fact, the upcoming hostage negotiations over raising the debt ceiling—Republicans say they’ll refuse without deep spending cuts in return—should make Lew’s hasty confirmation all the more likely. Republicans can’t very well threaten to bring down the global economy, while at the same time leaving the country unprepared by refusing to install the president’s next Treasury secretary.