One of Washington’s favorite guessing games — behind Mitt Romney’s veepstakes, but way ahead of who will run the Commerce Department — is who will replace Timothy Franz Geithner as Treasury Secretary. And as of today, I’m ready to name a frontrunner, at least if Barack Obama is re-elected: Erskine Bowles.
This wouldn’t be the first time Bowles got a call from the White House. The Obama administration tapped Bowles to co-chair the National Commission of Fiscal Responsibility and Reform — better known as the Simpson-Bowles Commission. Word on the street is that this wouldn’t even be the second time Bowles got a call from the White House. They’ve felt him out about joining the administration in a more formal capacity before. But he wasn’t interested.
Bowles, a former chief of staff to President Bill Clinton, had built up a huge storehouse of bipartisan credibility as co-chair of the Simpson-Bowles Commission. He didn’t want to join the administration in 2011, when joining the administration meant trench warfare with the Republicans. And as Bowles assiduously worked to show off how bipartisan he was — lavishly complimenting Rep. Paul Ryan, for instance — the administration cooled on him in return.
But next year is different. Next year is the year the fiscal deal has to be made. And if Bowles is Treasury Secretary, he’ll be the guy making the deal. That’s way better than leading a commission. It’s even better than being well-liked by both sides. That’s legacy material.
For the Obama administration, Bowles has a number of qualifications. For one thing, Republicans adore him. Ryan has called him “my favorite Democrat.” Appointing Bowles to be Treasury Secretary would ensure a smooth confirmation, and it would be interpreted as a sign of goodwill and “seriousness” both by Republicans and by the media. Coming after a bitterly partisan election and at the outset of a hugely consequential series of negotiations, that could have real appeal to the White House.
One reservation you often hear when playing the “who will be the next Treasury Secretary” guessing game is, “but they have no market experience.” For better or worse, it’s considered crucial that the Treasury Secretary understand, and be capable of working with, markets. Bowles was an investment banker before he entered politics, and he currently serves on the board of directors for both Morgan Stanley and GE. He’s also personally beloved by Wall Street, where “Simpson-Bowles” has deep and fervent supporters, including many who have no real idea what’s in it. Appointing Bowles would be a signal to them that Washington is getting serious.
The question for the White House is whether Bowles can be trusted to be a team player when it counts. After all, he’s Ryan’s favorite Democrat for a reason. And you can’t have your Treasury Secretary undercutting your negotiating strategy.
Which gets to why I’m writing this post today, as opposed to a week ago. This morning’s Washington Post included an op-ed by Bowles entitled “Romney’s tax plan wouldn’t cut the deficit.” In it, Bowles writes:
As a businessman with real respect and appreciation for Mitt Romney’s business career, I plead, from one numbers guy to another: You must have a balanced plan that reforms the tax code in a progressive, pro-growth manner and produces additional revenue if you are serious about reducing the deficit by at least $4 trillion without disrupting the country’s fragile economic recovery and hurting the disadvantaged.
A bit later in the piece, Bowles brings down the hammer. “Romney said that his tax reform proposal is ‘very similar to the Simpson-Bowles plan.’ How I wish it were.”
If you talk to the administration, they’ll tell you that the budget negotiations will ultimately revolve come down to one issue: Will Republicans agree to raise taxes? What Bowles did in this morning’s Washington Post is prove that he’s willing to bring the capital he’s built among Republicans, among the media, and among businessmen to the fight over that question. What Bowles wrote is little different than what the Obama White House has been saying for some time. But it’s an argument that has more force coming from Erskine Bowles, co-chair of the Simpson-Bowles Commission, than coming from them. And that could be a game-changer when it comes to negotiating the final deal.
There are downsides to Bowles, too. He’ll want the White House to go further than they’ve been willing to go on long-term health costs. But they’re prepared to do that once taxes are on the table. He’s also quite disliked by the left, which frequently refers to the Simpson-Bowles Commission as “the Catfood Commission.” That’s a drawback, but the Obama administration has always prized holding the center over placating the left. Indeed, Obama, who ran in 2008 as a post-partisan uniter and is unexpectedly and unhappily having to run a much more traditional and partisan campaign in 2012, might see that as a benefit. If he can press the reset button after this election, he’s going to do it.
So my answer to the guessing game is simple: If Barack Obama wins reelection this year, I’d bet that Erskine Bowles will be our next Treasury Secretary.