Nov. 9 (Bloomberg) -- Treasury Secretary Timothy F. Geithner will stay in his post through President Barack Obama’s inauguration as the administration negotiates with Congress to avert the so-called fiscal cliff, White House press secretary Jay Carney said today.
Carney, calling Geithner a “key participant” in the talks, declined to say whether the Treasury secretary would stay longer if there is no resolution by inauguration day, Jan. 21. “I don’t have a specific day he’ll depart” or how long the talks might go on, Carney said at a news conference today in Washington.
The Obama administration and lawmakers are trying to avert more than $600 billion of tax increases and federal spending cuts that are set to kick in automatically in January as part of a deal last year to raise the debt limit. Obama and House Speaker John Boehner, in separate remarks today, left open the possibility of agreement on preserving current tax rates while limiting tax breaks for top earners to raise revenue.
Geithner, 51, had said previously he doesn’t plan to stay at the Treasury for a second Obama term. He wanted to leave last year and was asked by Obama to stay on.
“I’m sure Tim is ready to go home and finally get a break, but this makes a lot of sense,” said Tony Fratto, a White House and Treasury Department spokesman during the George W. Bush administration. The White House needs to nominate a successor by December so that the Senate can confirm that person before congressional hearings on the federal budget are held in February, Fratto said.
‘Can’t Go On’
“This can’t go on longer than that,” said Fratto, who is now a partner at Hamilton Place Strategies, a policy and communications consulting firm in Washington.
“It makes sense to have a smooth transition, with no vacancy, at a time when there’s serious work that needs to get done,” said Michele Davis, a partner at communications consulting firm Brunswick Group LLP in Washington and a former Treasury Department spokeswoman.
One of the top potential candidates to succeed Geithner is White House Chief of Staff Jack Lew, administration officials said this week. A onetime aide to former House Speaker Tip O’Neill, Lew served as Office of Management and Budget director for Obama and former President Bill Clinton.
Another possible contender is Erskine Bowles, who served as Clinton’s chief of staff and was co-chairman of a bipartisan panel formed by Obama that drafted a plan to cut the deficit, the officials said.
Stocks rallied today as a report showing consumer confidence rose to a five-year high overshadowed concerns about the fiscal cliff. The Standard & Poor’s 500 Index gained 0.2 percent to 1,379.85 at the close of trading in New York. The benchmark gauge has fallen 2.4 percent this week.
Geithner, the only remaining member of Obama’s original economic team, played a key role in the government’s taxpayer-funded bailouts during the 2008 financial crisis, when he was president of the Federal Reserve Bank of New York. He took over at the Treasury in January 2009.
Geithner said in June 2011 that he would start commuting to Washington from New York because his son was returning there to finish high school. He told White House officials that he was considering leaving office once a deal to raise the federal debt limit was reached in Congress. In August 2011, five days after Obama signed the increase, Geithner said he would stay on at least through the 2012 presidential election.
His successor will inherit an economy still plagued by 7.9 percent unemployment more than three years after the end of the deepest recession since the Great Depression. The next Treasury 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.