Hubbard Said to Prefer Treasury to Fed If Romney Wins

Mitt Romney's Chief Economic Adviser Glenn Hubbard
Mitt Romney's chief economic adviser Glenn Hubbard said, "If we actually wanted the government the president has proposed, you would have to raise taxes to pay for it.” Photographer: David Paul Morris/Bloomberg

Glenn Hubbard, the chief economic adviser to Mitt Romney, would rather be Treasury secretary than Federal Reserve chairman if the Republican candidate wins the presidential election, according to three people familiar with his thinking.

Given the choice, Hubbard prefers to go to the Treasury Department to lead an effort to overhaul the tax code, said the people, who declined to be identified because they weren’t authorized to discuss the matter. They also said Hubbard could still end up at the Fed and other people are also under consideration for the Treasury. Hubbard declined in an e-mail to comment.

Hubbard, 54, was chairman of the White House Council of Economic Advisers under President George W. Bush. He helped craft Romney’s economic plan and has spoken frequently on behalf of the nominee against President Barack Obama’s policies.

“The fundamental choice about government is how big it is,” Hubbard, dean of Columbia University’s business school, said at a conference in New York yesterday. “If we actually wanted the government the president has proposed, you would have to raise taxes to pay for it.”

Andrea Saul, Romney’s spokeswoman, declined to comment.

Romney has said he wouldn’t nominate Fed Chairman Ben S. Bernanke, whose term ends in January 2014, for a third term. Bernanke, 58, is unlikely to seek another term even if Obama is re-elected, according to a person close to the chairman who declined to be identified.

‘Lot to Do’

Fed spokeswoman Michelle Smith referred to Bernanke’s remarks at a Sept. 13 press conference, when he said he has “a lot to do. I’m very focused on my work, and I don’t have any decision or any information to give you on my personal plans.”

If Obama wins next month’s election, he will have to fill several of the top economic jobs. Treasury Secretary Timothy F. Geithner has said he doesn’t plan to stay.

White House Chief of Staff Jack Lew, 57, is a leading candidate to replace Geithner, according to two people familiar with the discussions. As former White House budget director, Lew would be able to jump right into the fiscal-policy debate that will start after the election.

Another candidate to replace Geithner is Erskine Bowles, who was co-chairman of the president’s deficit commission, according to the people, who declined to be identified because they weren’t authorized to discuss the matter. These people said that there are other contenders for the Treasury job.

White House Press Secretary Jay Carney, asked today about possible nominees for Treasury secretary or other positions, said: “We have nothing to add to speculation about what personnel decisions might be made in a second term.”

Deficit Commission

Bowles’s advocacy of the deficit commission’s bipartisan plan has irritated some in the administration, the people said, although his good relations with Republicans could make Senate confirmation easier. Bowles, 67, has worked at Morgan Stanley and as an adviser to Credit Suisse First Boston and was chief of staff under President Bill Clinton.

Bowles didn’t respond to telephone calls or e-mails seeking comment. He said he isn’t interested in taking a cabinet-level position if Obama is re-elected, the Wall Street Journal reported on Oct. 5. “I’m staying in North Carolina,” the newspaper quoted Bowles as saying. “This is home for me.”

The new Treasury secretary will confront the so-called fiscal cliff, $607 billion of tax increases and federal spending cuts set to kick in automatically at the beginning of next year unless Congress acts.

The secretary will also be faced with cutting the $16.2 trillion public debt, in addition to seeking an overhaul of a federal tax code criticized by Republicans and Democrats alike. Bernanke’s successor may have the task of unwinding the central bank’s record monetary accommodation.

Hubbard said Oct. 8 that he is “personally critical of the efficacy” of the Fed’s third round of quantitative easing, announced last month, and that the central bank should “focus mainly on price stability and financial stability.”

The Fed has “wound up politicizing itself a bit” as its regulatory powers have expanded, he said at a panel debate at Columbia University.

Download: A Closer Look With Arthur Levitt: Glenn Hubbard


Before it's here, it's on the Bloomberg Terminal. LEARN MORE