This morning, Jack Lew, the president’s nominee for Treasury secretary, will stand before the Senate Finance Committee, raise his right hand, and testify as to his fitness to be the nation’s top economic policymaker. We’ll bring you live coverage at Wonkblog all morning, but in the meantime, here are some ideas for questions the senators should consider asking him. My colleague Jia Lynn Yang, who has covered Lew’s record as a senior executive at Citigroup during the financial crisis, offered some potential questions raised by that experience. Here are some more that focus on the issues specific to the job for which he is being considered.
The job of Treasury secretary is an unusual one. The exact role tends to evolve depending on who occupies the big office at 1500 Pennsylvania Avenue, but in general it requires someone to be among the most visible spokesmen for the United States economy and financial markets, the chief representative of the U.S. government on international economic diplomacy, a skilled negotiator with Congress on fiscal policy, an intimate counselor to the president on all things financial, and an administrator who manages crucially important offices such as those that issue U.S. government bonds and try to keep money out of the hands of terrorists. Oh, and the Treasury secretary, it has been said, is also the nation’s most prominent bond salesman. It is his job to make sure buyers of Treasuries always have confidence in the product, and will give us their money at a low interest rate.
Lew, interestingly, is a blank slate on many of these. His management chops aren’t really in question (he has been deputy secretary of state for management), nor is his closeness to the president (he is the outgoing White House chief of staff) or knowledge of fiscal policy (a former director of the Office of Management and Budget). But on many key questions about domestic and international economics and financial regulation, his views aren't well known. The Senate Finance Committee could follow this script at this morning’s session to help fill it in those blanks.
1) There has been debate among economists as to how much debt a nation like the United States can handle without risking a fiscal crisis, and conversely how much deficit reduction might damage growth in the short-run. I understand that you’re not an economist, but what are your broad instincts on whether there is some debt-to-GDP ratio that would put the United States in a danger zone? And do you believe that deficit reduction would have benefits in boosting confidence that might meaningfully offset the pain of austerity, or do you think of deficit cuts purely as a subtraction from economic growth?
2) You will have the president’s ear as he tries to decide whom to appoint to follow Fed chair Ben Bernanke when Bernanke’s term is up in January, 2014. What advice will you give the president as to the kind of qualities he should want in a Fed chair? Do you think that the current path of the Fed on monetary policy and financial regulation is broadly correct, or will you seek a candidate who might change direction in some meaningful way?
3) Do you believe the giant, “too big to fail” banks, such as Citigroup, where you worked, offer meaningful benefits to the global economy by virtue of their size? Is the implicit government safety net they receive worth it, or could the U.S. and global economies be just fine with smaller, easier-to-manage banks that had less official and unofficial government backing? Mr. Lew, what would you do about too-big-to-fail?
4) As Treasury secretary, you will be the nation’s top international economic spokesman. Do you consider China to be a currency manipulator, pushing the value of its currency down to unfairly advantage its exporters? As you surely know, China has been gradually letting its currency rise, and there’s a good argument that a number of other countries collectively do more to distort markets to push their currencies down relative to the dollar. What is your strategy for persuading the likes of Japan, Singapore, Switzerland, and Saudi Arabia to back off?
5) You will oversee the U.S. representation on the International Monetary Fund, of which we are the largest shareholder. How do you expect to deploy that power? Should the fund have taken more of a role in working to resolve Europe’s crisis or less? What do you see as the fund’s role in a modern world economy?