Treasury Secretary gears up for fiscal cliff showdown
In the postelection showdown over expiring tax cuts and automatic spending reductions, seasoned crisis fighter Timothy Geithner will play a crucial role as the administration’s top economic official and a liaison to both Capitol Hill and the financial markets.
The White House and congressional Republicans are gearing up for a tense six weeks of negotiations on the fiscal cliff amid warnings from economists of another recession if the talks reach a stalemate. President Obama has been adamant that the Bush tax cuts on the wealthiest Americans must be allowed to expire, while Republicans insist that all of the tax cuts should be renewed.
Geithner, who had long planned to step down as Treasury secretary at the end of four years, will be heavily involved during the lame-duck session in providing technical economic-policy advice within the administration. The former New York Federal
Reserve Bank president, a lead architect of the response to the 2008 financial crisis, will also focus heavily on gauging Wall Street’s reactions to the fiscal-cliff saga.
For months, Geithner has been fielding questions on Capitol Hill about the market consequences of going over the fiscal cliff.
Still, it’s unlikely Treasury will need to weigh in during the lame duck with detailed advice on reshaping the tax code. If lawmakers and the White House are able to patch together any deal before the end of the year, it would likely be a largely political agreement rather than a comprehensive fiscal package.
That means Obama and White House Chief of Staff Jacob Lew will take the lead in negotiations with House Speaker John Boehner and other congressional players.
“I strongly suspect they will not reach a major deal on taxes and spending,” said Steve Bell, a budget expert with the Bipartisan Policy Center, who served as staff
director on the Senate Budget Committee under former Sen. Pete Domenici, R-N.M. “Therefore, although his advice will be sought, he’s not going to be one of the eight or nine people in the room in the lame duck when the decisions are made.”
Budget-battle-worn Democrats, policy analysts, and Hill aides offered similar perspectives. They argued that Geithner will be
assuming more of a supporting role rather than a leading one in negotiations because of the nature of the deal that is likely to be struck in the compressed time frame—and somewhat awkward political dynamics—of a lame-duck session.
“The negotiations here are going to be less at a staff level or even at the level of Cabinet secretary than they are between Boehner and Obama,” said Stan Collender, a national director of financial communications at Qorvis public relations and a former Democratic aide to the House and Senate Budget committees. “This is going to be the highest-level negotiations. This is not going to be a lot of staff preparatory work, especially because I don’t expect a big deal to get done. This is either kick the can down the road or let the cliff happen.”