Jack Lew, GOP Chief Tormentor, as Treasury Secretary
Policy + Politics

Jack Lew, GOP Chief Tormentor, as Treasury Secretary

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By choosing Jacob (Jack) Lew as the next Treasury Secretary, President Obama has turned to a trusted aide and one of Washington’s most seasoned budget negotiators – a strong ally of liberal Democrats whose style has aggravated congressional Republicans.

The president is expected to nominate Lew, the current White House chief of staff, to succeed Treasury Secretary Timothy F. Geithner on Thursday, and to urge the Senate to give swift approval to his choice. Unlike Geithner, a former president of the New York Federal Reserve Bank with a reputation for deftly juggling the 2008 financial crisis, Lew is the consummate D.C. insider with years of experience shaping federal budgets.

Lew initially led the Obama administration’s 2011 debt-ceiling talks with top Republican lawmakers. Although he long enjoyed a reputation as a straight shooting numbers guy, his approach infuriated House Speaker John Boehner and GOP congressional aides.

Lew, 57, was portrayed as the Republicans chief tormentor during the contentious 2011 negotiations in Bob Woodward’s book, “The Price of Politics.” At the time, Lew was in the second of what could be four assignments in the administration as director of the Office of Management and Budget.

When Boehner reopened stalled talks with Obama on July 15, he had a request, Woodward writes: "Please don't send Jack Lew. The budget director talked too much, was uncompromising, and Boehner's staff did not believe he could get to yes."

Republicans saw him as an annoyance who preferred to lecture them on why the Democratic worldview was superior, Woodward reports.  At one point as a favor for Boehner, Ohio Gov. John Kasich—a former Republican chairman of the House Budget Committee—stepped-in and asked if talks could instead occur with Gene Sperling, the chairman of the White House National Economic Council. Administration officials refused.

Boehner told Woodward, "Jack Lew said no 999,000 times out of a million." Then he corrected himself. … At one point I told the president, keep him out of here. I don't need somebody who just knows how to say no."

Boehner's chief of staff at the time, Barry Jackson, described Lew this way: "Always trying to protect the sacred cows of the left." Woodward writes that Jackson said Lew would be "going through Medicare and Medicaid almost line by line while Boehner was just trying to reach some topline agreement."

To Lew, the problem was that Boehner did not like details, according to Woodward.

"When the Speaker's office made a proposal, Lew would return with an analysis of what it would mean for the average Medicare retiree and people at different income levels," Woodward writes. "It complicated the negotiations, and in Lew's experience, the answer 'things are complicated' was not highly appreciated by the speaker's office."

Lew was also stunned by how congressional Republicans disrespected Obama. At a crucial moment in the 2011 negotiations, Boehner refused to return a White House phone call, something that Lew knew never would have happened when his former boss House Speaker Tip O’Neill was hashing out an agreement with President Reagan.

Whether those hard feelings persist remains to be seen. But by picking Lew as the next Treasury Secretary, Obama has indicated his economic focus going forward. Lew has cultivated a reputation for dissecting the nooks and crannies of government finances, whereas Geithner had to rebuild the entire infrastructure for regulating banks and the markets.

The next Treasury secretary will likely play a frontline role in working with Congress on a deal to raise the debt ceiling before the government begins to default on its obligations, as well as advising on a host of other issues – such as tax reform and managing entitlement costs.

But he will also need to confront a European economy still undergoing a freefall that could inflict economic damage for generations and a rapidly maturing Chinese economy. Other than a brief stint as a senior executive in charge of operations at Citigroup’s alternative investments division from 2006 to 2009, Lew has had no long-term experience in the financial world.

“[I]n our view, Mr. Lew lacks significant experience in financial regulatory matters and the financial markets,” wrote Brian Gardner, head of Washington research at the investment bank Keefe, Bruyette and Woods. “While he can undoubtedly learn the material on the job, we question whether he has sufficient relationships with the banking industry in the US and abroad, which can be critical during a financial crisis.”

Instead, he will rely on decades of experience in government serviced – both at the White House and on Capitol Hill – and a solid personal relationship with Obama, who has become his chief benefactor.

In early January of last year, the president tapped Lew, then the budget director, to replace William Daley as White House chief of staff.  In a major shakeup for an administration gearing up to wage a tough reelection campaign, Daley stepped down after only a year in the post to return home to Chicago.

As the scion of a Chicago political dynasty, Daley, who succeeded his brother’s replacement as the Second City’s mayor, Rahm Emanuel, struggled with outreach to both Capitol Hill and the business community.

He raised the ire of Democrats after he accused both congressional Democrats and Republicans of impeding Obama’s ability to lead in an October interview with POLITICO. He was also the subject of widespread criticism from political operatives from both parties, who felt Daley had failed to strengthen relations between the White House and Congress during his first 10 months on the job.

Lew, highly respected in Washington,  served as director of OMB once before, during the Clinton administration, and spent the first two years of Obama’s administration as a high ranking budget and operations official in the Department of State.

“During his first tour at OMB under President Clinton, Jack was the only budget director in history to preside over budget surpluses for three consecutive years,” Obama said at the time he picked Lew as his chief of staff. “And over the last year he has helped strengthen our economy and streamlined the government at a time when we need to do everything we can to keep our recovery going.”

Lew was confirmed in November of 2010 as head OMB after Sen. Mary Landrieu, D-La., dropped her months-long hold against the nomination and the Senate confirmed Lew by voice vote. The administration had repeatedly pleaded for a speedy confirmation of Lew to replace former White House budget chief Peter Orszag amid serious budget and economic problems. But Landrieu kept the roadblock in place until she could extract concessions from the Obama administration on deep-water and shallow-water drilling in the Gulf of Mexico in the wake of the BP oil spill and a brief moratorium on drilling.

Lew had been in limbo since September 2010 while the administration tried to iron out the dispute with Landrieu. In November that year, Obama welcomed the news of Lew’s confirmation and praised his “unparalleled experience and wisdom” to right the economy.

“After years of irresponsibility in Washington, we need to make the tough choices to put our country back on a sustainable fiscal path and lay the foundation for long-term job creation and economic growth,” Obama said in a statement when Lew was confirmed. “I am confident Jack Lew can lead us in these efforts, and look forward to working with him in the days ahead.”