Feb. 26 (Bloomberg) -- Jack Lew won the Senate Finance Committee’s approval to become U.S. Treasury secretary just as lawmakers struggle to avoid across-the-board government spending cuts scheduled to take effect on March 1.
Senate Majority Leader Harry Reid said he expects the full Senate to take up the nomination this week. Lew, 57, President Barack Obama’s former chief of staff and ex-budget director, will replace Timothy F. Geithner, who left last month.
Lew, praised for his knowledge of the federal budget by lawmakers on both sides of the aisle, has been advocating for Obama’s plan to replace across-the-board reductions with a mix of spending cuts and changes such as eliminating tax breaks for oil and gas companies. Republicans insist on deficit reduction achieved by spending cuts alone.
“Mr. Budget is going to be thrust into the budget fight from day one,” Ed Mills, an analyst at FBR Capital Markets & Co. in Arlington, Virginia, said in a phone interview today. “It certainly doesn’t get easier from here for Lew.”
Unless Congress agrees on an alternative way to limit the deficit, reductions worth $85 billion for this year will start in three days, leading administration officials to predict furloughs of 800,000 of the Pentagon’s civilian employees, cuts in spending on child nutrition and housing vouchers.
Lew, testifying to the panel on Feb. 13, emphasized his ability to work across party lines and spoke in favor of revamping the corporate tax system to lower rates and eliminate loopholes.
Republican Senator Charles Grassley of Iowa criticized Lew for perks he received when working at New York University and Citigroup Inc.
Lew worked as a Citigroup executive from 2006 before joining the Obama administration at the State Department in 2009. He served as managing director and chief operating officer of Citi Global Wealth Management and in 2008 he moved to Citi Alternative Investments, which managed billions of dollars in private-equity and hedge-fund investments.
Grassley questioned Lew’s personal involvement in a fund in the Cayman Islands and a $940,000 bonus that Lew received in January 2009 as Citigroup was receiving federal bailout funds. Lew said he didn’t know the fund, offered to him as a Citigroup employee, had a Cayman Islands address and that he was paid in the same manner as other private-sector employees in similar jobs.
Lew invested $56,000 in the Citigroup fund in the Caymans and sold it for $54,418, according to Sean Neary, a spokesman for the Senate Finance Committee.
“Mr. Lew has been less than forthcoming about his time at Citigroup and NYU,” Orrin Hatch, top Republican on the panel, said today. “Indeed, after extensive questioning, we still know very little about these areas of his record. This is problematic and I plan to go into these concerns more fully when the nomination is debated on the floor.”
Hatch was among the Republicans on the panel voting for Lew’s nomination. Grassley voted against.
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