Key appointees at Treasury used as pawns in unrelated legislative battles

Senate Minority Whip John Kyl at first put a hold on Treasury nominees.
Senate Minority Whip John Kyl at first put a hold on Treasury nominees. (Harry Hamburg - AP)
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By David Cho
Washington Post Staff Writer
Saturday, March 20, 2010

For more than a year, the Treasury Department has grappled with a monumental global economic crisis while many of its most senior people have had to walk out of internal meetings at critical moments and have been barred from joining in-depth exchanges with foreign governments.

That's because the appointments of these officials have been blocked at times by various Republican senators. Until now, their reasons for thwarting the Treasury have been largely unknown beyond the halls of Congress.

It turns out the sources of discontent apparently were not the appointments themselves. In one case, it was a tax penalty on small businesses. In another, the passage of an anti-tobacco plan in Canada. Yet another involved a tussle over online gambling.

Efforts by senior Treasury officials to address some of these beefs failed to persuade Republican lawmakers to allow all the nominees to take their posts. That has forced the Obama administration to tackle the economic crisis without top lieutenants at the Treasury who, in particular, oversee policy relating to the U.S. financial system, international affairs and taxes.

Holding up nominees -- more than 80 appointments across the administration remain in limbo -- has been a well-worn tactic on both sides of the aisle over the years. Now it's souring the mood in Washington, already bitterly divided over the efforts to pass health-care legislation and overhaul the financial regulatory system.

Political analysts say the holds highlight the dysfunction of the political system. In the Senate, a lawmaker can block a nominee without revealing the reason or even his or her identity.

Treasury Secretary Timothy F. Geithner has made several attempts to break the logjam to get his staff in place.

Last month, he met with Senate Minority Whip Jon Kyl (R-Ariz.), who had put a hold on about a half-dozen Treasury nominees over the issue of online gambling.

Kyl, who staunchly opposes online gambling, objected that the Treasury had pushed off implementation for six months of a law that would effectively ban the practice, congressional aides said. The administration had been lobbied hard by the banking industry and lawmakers, who said the law was difficult to implement. Rep. Barney Frank (D-Mass.), who leads the House Financial Services Committee, said he led the efforts to postpone the ban, arguing that government should not be telling the public what to do with its money.

In the meeting, Geithner agreed to no further delays, and Kyl lifted his hold, officials recounted.

That deal, however, did not clear the way for the Treasury appointments.

Sen. Jim Bunning (R-Ky.) slapped another hold, this time on two of the senior-most nominees, as well as two U.S. trade representatives, according to congressional aides from both parties.

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