Obama Said Close to Choosing Lew for Treasury Secretary

Jan. 8 (Bloomberg) -- Bloomberg's Julianna Goldman reports that President Barack Obama is close to selecting Jack Lew to replace Timothy Geithner as U.S. Treasury Secretary. She speaks on Bloomberg Television's "Bloomberg Surveillance."

President Barack Obama may choose White House Chief of Staff Jack Lew to replace Treasury Secretary Timothy F. Geithner as soon as this week, according to two people familiar with the matter.

The selection of Lew would trigger a White House shuffle for Obama’s second term as he replaces his chief of staff and moves senior aides into new roles, said the people, who requested anonymity to discuss personnel matters.

While Obama hasn’t made a final decision to pick Lew, the president’s staff has been instructed to prepare for his nomination, said one of the people.

Obama has several other cabinet and cabinet-rank jobs to fill, including commerce secretary, Environmental Protection Agency administrator, U.S. trade representative and director of the Office of Management and Budget.

The next Treasury secretary will play a leading role in working with Congress to raise the government’s $16.4 trillion debt ceiling. The U.S. reached the statutory limit on Dec. 31, and the Treasury Department began using extraordinary measures to finance the government. It will exhaust that avenue as early as mid-February, the Congressional Budget Office says.

Geithner plans to leave the administration by the end of January even if the debt ceiling issue hasn’t been settled.

Photographer: Rex Features via AP Images

U.S. President Barack Obama walks with Chief of Staff Jack Lew during a break from debate preparations in Virginia on Oct. 14, 2012. Obama may choose Lew to replace Timothy Geithner as Treasury Secretary. Close

U.S. President Barack Obama walks with Chief of Staff Jack Lew during a break from... Read More

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Photographer: Rex Features via AP Images

U.S. President Barack Obama walks with Chief of Staff Jack Lew during a break from debate preparations in Virginia on Oct. 14, 2012. Obama may choose Lew to replace Timothy Geithner as Treasury Secretary.

White House press secretary Jay Carney did not directly answer yesterday when he was asked whether Obama would seek to have a new Treasury secretary confirmed before Geithner leaves.

“I have no other announcements to make or updates to give with regards to personnel,” Carney said. “I am sure that when the president nominates a successor to Secretary Geithner, he will look forward to speedy consideration by the Senate.”

“But I don’t have a timetable for that,” he said.

Budget Talks

The debt limit will be the first in a series of fiscal negotiations in the new year between the Obama administration and Republicans, who have a majority in the House of Representatives, over the budget and spending.

While Obama has vowed he won’t bargain with the debt ceiling, Republicans such as Senate minority leader Mitch McConnell have said they want to link it to spending cuts.

Markets rallied last week after negotiations between the White House and congressional Republicans led to passage of a law raising income-tax rates to 39.6 percent for couples with annual income above $450,000 while extending tax cuts for lower incomes. The Standard & Poor’s 500 Index (SPX) dropped 0.3 percent to 1,461.89 at 4 p.m. yesterday in New York before the start of earnings season.

Spending Cuts

The deal on taxes delayed until March 1 automatic budget cuts, setting up another hurdle to be negotiated.

While Lew did not directly negotiate with Congress on the eleventh-hour budget deal, which averted more than $600 billion in tax increases and spending cuts, he helped supervise the White House strategy and briefed Wall Street executives on the talks.

As a former aide to the late House Speaker Tip O’Neill, a Massachusetts Democrat, and a two-time director of the Office of Management and Budget, Lew, 57, has experience on both ends of Pennsylvania Avenue. He’s spent most of his career in government, with a brief detour to Wall Street, where he worked as a managing director for Citigroup from July 2006 until the end of 2008.

Cabinet Selections

After selecting former Senator Chuck Hagel as defense secretary and counterterrorism adviser John Brennan as CIA director yesterday, Obama will turn his attention to filling out the rest of his second-term cabinet. On Dec. 21, Obama announced his choice of Senator John Kerry, a Massachusetts Democrat, as secretary of state, replacing Hillary Clinton.

The nominations for those positions as well as Treasury secretary are subject to Senate confirmation.

Among the leading candidates to replace Lew as Obama’s chief of staff are Denis McDonough, currently a deputy national security adviser, and Ron Klain, who had served as Vice President Joe Biden’s chief of staff.

McDonough, who worked as an aide to former Senator Tom Daschle as well as in Obama’s Senate office, joined the National Security Council as deputy director of strategic communications at the start of Obama’s term. When Tom Donilon became the NSC director after General Jim Jones departed, McDonough became an assistant to the president and the deputy national security adviser.

Klain served as chief of staff to both Biden and former Vice President Al Gore. In January of 2011, he left the White House and returned to Case Holdings, the holding company of AOL co-founder Steve Case and served as an outside adviser to Obama.

Neither McDonough nor Klain responded to e-mails seeking comment.

To contact the reporter on this story: Hans Nichols in Washington at hnichols2@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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