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Lew set to start at Treasury as budget cuts loom
Thursday - 2/28/2013, 12:10pm EST
AP Economics Writer
WASHINGTON (AP) -- Jacob Lew is scheduled to be sworn in Thursday as Treasury secretary and will have to hit the ground running.
He is taking over the job just a day before huge automatic government spending cuts are set to take effect. He's likely to be involved with any negotiations to reverse the cuts, and also in budget talks next month to continue funding the government.
The Senate confirmed Lew late Wednesday, affirming President Barack Obama's choice of a budget expert at a time when Congress and the White House are at odds over spending and taxes.
"At this critical time for our economy and our country, there is no one more qualified for this position than Jack," Obama said in a statement issued after the Senate vote. "His reputation as a master of fiscal issues who can work with leaders on both sides of the aisle has already helped him succeed in some of the toughest jobs in Washington."
The vote was 71 to 26 to support the nomination. Voting against Lew's confirmation were 25 Republicans and independent Bernie Sanders of Vermont.
Lew, 57, had most recently served as Obama's chief of staff. He succeeds Timothy Geithner, who completed a tumultuous four-year term in which he helped lead the administration's response to the financial crisis and recession.
Lew began his government service in the 1980s as an aide to House Speaker Tip O'Neill. He brings nearly three decades of government service to the job, including two stints as White House budget director.
Republican Sen. Jeff Sessions of Alabama, who opposed the nomination, said Lew as budget director was the architect of the Obama's administration's failed efforts to get soaring deficits under control.
During his confirmation hearing, Lew signaled no major economic policy changes. He advocated a balanced approach to reducing the long-term budget deficit through spending cuts and additional tax revenue.
He said he would be open to reforms to Medicare, but he didn't spell out any details. Lew also said he would work with the committee on a rewrite of the tax code.
Beyond the budget, Lew is expected to hew closely to the positions Geithner struck on Europe's debt crisis, the U.S. relationship with China and the administration's defense of the Dodd-Frank financial overhaul law that the banking industry has fought to weaken.
Some Republicans voted against Lew because they were not satisfied with his answers about his previous employment with Citigroup, including a brief time when he was chief operating officer for an investment unit in 2008. The unit has been criticized for making risky investments that imploded during the financial crisis. And Lew received a bonus of nearly $1 million in early 2009, a time when Citi was being bailed out by taxpayers.
Lew told the panel that he didn't make decisions about the investments being offered to clients. He said his bonus reflected compensation for his work.
Sen. Charles Grassley, R-Iowa, opposed Lew's nomination. He cited questions about his time at Citi, as well as Lew's compensation while working as chief operating officer at New York University.
"Mr. Lew's eagerness and skill in obtaining bonuses, severance payments, housing allowances and other perks raises concerns about whether he appreciates who pays the bills," Grassley said.
One potential weakness for Lew: His relative inexperience with financial markets and international economic crises -- areas that had played to Geithner's background. Analysts think Lew will keep pressuring Europe to deal aggressively with its budget and debt issues. But they think this will consume less of his time given that Europe's debt crisis now poses less of a threat to the global economy.
On trade, Lew is expected to keep prodding China. The U.S. trade gap with the world's second-largest economy hit another record high last year. No breakthrough is expected, though.
Lew will also need to calm investors who have grown concerned about possible currency wars after Japan's new government sought to lower the value of the yen as a way to boost exports and its weak economy. A weaker yen makes Japanese goods cheaper overseas and foreign goods costlier in Japan.
And Lew will need to defend the Dodd-Frank Act, which overhauled financial regulation after the 2008 crisis. Since the law was passed in 2010, Wall Street has fought to weaken many of its stricter regulations.
He may also need to work on his signature, which starts off with a soft "J'' but is followed by seven loopy scribbles that render it illegible. The Treasury secretary's signature is emblazoned in the lower right corner of U.S. dollar bills of all denominations.
When he announced Lew's nomination, Obama said Lew had promised to work to make one letter legible "in order not to debase our currency."
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