December 20, 2012
With the countdown to the fiscal cliff at the end of the year dominating the attention of the White House and lawmakers, President Obama is unlikely to make any announcement about his choice to replace departing Treasury Secretary Timothy Geithner until a resolution is reached in that standoff.
Geithner—who wanted to step down in 2011—has long made clear that he is not planning to stick around for a second term in the Obama administration, and White House Chief of Staff Jacob Lew, a former Office of Management and Budget director, remains the odds-on favorite to succeed him.
But with talks on how to avert the so-called fiscal cliff taking center stage, the Obama administration has little incentive to distract fragile negotiations by making news on a proposed change in the administration’s economic leadership that would not take place until next year. If unaddressed, the mix of scheduled tax increases and spending cuts are widely anticipated to throw the economy back into a painful recession and the White House does not want to unnecessarily disrupt efforts to reach a resolution.
“My gut tells me they are holding off on anything until they get a deal, at least a compromise in principle, on the fiscal cliff,” said Stephen Myrow, a former Treasury official and the managing director of ACG Analytics, an independent investment research firm. “I think they wait on Treasury secretary maybe until the end of next week, or they do it right after they get back [from the holidays].”
Myrow pointed out that announcing Lew is the Treasury secretary in waiting could unnecessarily complicate the administration’s negotiating position on fiscal cliff talks.
“Everyone’s been assuming it is Jack Lew,” he said. “The other piece of this is they probably wanted to keep Lew clean from the cliff so that if there was any backlash it didn’t affect his confirmation.”
Obama's first announcement of a Cabinet change for his new administration could come as early as this week. He is widely expected to choose Sen. John Kerry as his nominee to replace Hillary Clinton as secretary of state. Like Geithner, Clinton has long made clear she would step down at the end of Obama's first term.
The conventional wisdom is that Geithner is likely to announce he is leaving soon after the fiscal cliff crisis is resolved and Lew is expected to be named as the nominee quickly thereafter.
“They don’t need a distraction during fiscal cliff, and they don’t want to put anything out there that would give the Republicans more leverage, like a pending nomination for a cabinet member, particularly on the economic side,” said a former Treasury official.
A seasoned budget negotiator, Lew is well-known and trusted on Capitol Hill. He has successfully undergone the vetting and confirmation process previously, which would give him an inside track, positioning him well to sail through the Senate approval process again.
But he does not necessarily have the nomination locked down.
The administration could upset expectations and nominate someone else.
Bloomberg News reported Tuesday that American Express CEO Kenneth Chenault is being considered for an administration post, possibly Treasury secretary, but sources close to the administration argued Chenault is more likely to be considered to head the Commerce Department or for another post.
Erskine Bowles, a former chief of staff to President Clinton, had also been cited as contender for Treasury, but he has been criticized by some on the left for appearing too close to Wall Street and has taken himself out of the running, saying that he promised his wife he would stay in Charlotte.
Another name that has been bandied about is that of BlackRock CEO Laurence Fink but there has been no buzz about him in the past month.
In the meantime, other than Geithner’s looming exit, there is little urgency to name a Treasury secretary nominee.
“They can wait. I don’t think there are any market implications on the timing of an announcement at all,” said Brian Gardner, an analyst at Keefe Bruyette & Woods. “The market is just focused on Washington finishing fiscal cliff negotiations.”
This article appeared in the Thursday, December 20, 2012 edition of National Journal Daily.
December 20, 2012