January 4 2013
There’s a lot of talk about the next stages of the fiscal cliff: the Treasury has said that in February, it will be unable to make payments on the federal debt, forcing Congress to raise the debt ceiling from its $16.4 trillion limit. A few weeks after that, the Federal government risks another shutdown when funding for Fiscal Year (FY) 2013 runs out. Around the same time, the sequester’s unpopular cuts will be phased in.
February and March are likely to be gut-wrenching – perhaps a perfect storm for budgetary matters.
In the midst of this turmoil, President Obama will appoint a new Secretary of the Treasury to replace Timothy Geithner, who has announced his resignation, which will take effect at the end of this month. Such a nomination could be a great opportunity for a president serious about deficit reduction and addressing structural spending problems.
But who’s at the top of his list? The White House Chief of Staff Director Jack Lew, who directed the Office of Management and Budget from 2010-2012. During his tenure, Washington maintained trillion dollar deficits and failed to propose substantive spending cuts. As a result, the White House and Congress failed to implement any budget while Lew directed the Office of Management and Budget from 2010-2012.
So far, all the President has implemented is tax increases without spending cuts. Lew’s failure to provide solutions for spending cuts while directing the OMB laid the groundwork for over $6 trillion to be added to the federal deficit since Obama took office.
Lew is more unpopular with Republicans than Geithner, who was a more seasoned politician and actually maintained a level of respect in some Republican circles. A Lew appointment could create further rifts between the parties, just in time for what will likely be acrimonious negotiations over the debt limit.
Lew would likely add to the cold war between Congress and the White House and fail to lead negotiations towards comprehensive deficit reform. Even more troubling, lack of White House cooperation regarding spending cuts could lead to a debt limit debate stalemate and result in the downgrading of our nation’s credit rating.
Instead of Lew, President Obama should nominate a Treasury Secretary known for easing negotiations, reducing spending, and implementing structural reforms.
But, unfortunately, such a Treasury Secretary would not reflect the goal of his boss: to expand the government.