Rather, it will involve a sustained conflict with congressional Republicans over the nation’s finances. The government is likely to face a deadline to raise the $16.4 trillion federal debt ceiling no later than March 1 — as well as a series of deep and automatic spending cuts known as sequestration set to begin around the same time.
These upcoming battleswill once again pit Democrats’ economic vision against that of Republicans. Democrats say they want to raise taxes on the wealthy to shrink the deficit but reduce government spending sparingly so as to preserve funding for domestic priorities such as education. Republicans oppose new taxes, saying they would crimp economic growth, and favor deep cuts to spending.
Lew, 57, is a veteran of these fights. He was formerly the budget director for Obama and President Bill Clinton. He has been negotiating compromises over taxes and spending since the 1980s, when he was a top aide to then-House Speaker Thomas P. “Tip” O’Neill Jr. (D-Mass.).
“Jack Lew is a great budget man taking over Treasury at exactly the moment that budget and tax issues have become the dominant economic issue in Washington,” said Austan Goolsbee, a former chairman of Obama’s Council of Economic Advisers.
Some Democrats say that although Lew may be the best choice at the moment, the White House must address unemployment and keep pushing for measures to create jobs.
“Jack Lew is the guy you’d want there for upcoming fiscal deals, but it’s also very important to have folks on the team who will push the Keynesian, or jobs, imperative from the inside, even if that means a temporarily larger budget deficit,” said Jared Bernstein, a former White House economic adviser.
“Though they’ve been winning the arguments, the White House has been too stuck on the Republicans’ side of the field, basically arguing deficits and austerity measures,” he said. “They need to shake that up somehow.”
Lew’s nomination will allow Geithner, who has been seeking to leave Treasury since 2011, to finally step down. In 2011, Obama pleaded with him to keep his post, given the European financial crisis and continual fiscal battles, and he agreed to stay through the end of this month. Geithner, who came in amid a financial crisis and deep recession, leaves Lew an economy experiencing a steady, but not robust, recovery.